Definition
Price levels calculated from the previous session's high, low and close, used as reference points for the current session.
The story
The basic version averages yesterday's high, low and close to get a central pivot, then works out levels above it, called R1 and R2 (resistance 1 and 2), and below it, called S1 and S2 (support 1 and 2). If yesterday's high was 110, low 100 and close 108, the pivot is 106, R1 is 112 and S1 is 102. Because the math is the same for everyone, many traders end up looking at the same levels.
Why you'll see it
Many charting platforms plot them automatically, so they're on a lot of day traders' screens.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms