Pivot points are a set of support and resistance levels calculated from the prior period's high, low, and close. The central pivot (P) is their average; support levels (S1, S2, S3) sit below and resistance levels (R1, R2, R3) above, derived by formula. They're computed before the session even opens.
How they work
The central pivot acts as the session's rough equilibrium — trading above it leans bullish for the day, below it bearish. R1/S1 are the first levels price tends to test; R2/S2 and beyond mark stronger extensions. Because they're purely mechanical, every trader using them sees the exact same lines.
Why they matter: shared attention
Pivot points work partly because they're self-fulfilling — a huge number of intraday traders and algorithms watch the same computed levels, so orders cluster there and the levels become real. That's the same mechanism behind Fibonacci and round numbers: shared attention creates order flow.
Pivots work because everyone's looking at the same lines — attention becomes support.
Using them
Pivots are most useful as a map of likely intraday reaction points, combined with real structure like VWAP, the opening range, and prior-day levels. When a pivot lines up with another level, the confluence matters. Alone, a pivot is a suggestion of where price might react — not a guarantee that it will.
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NoVo is a software tool for market analysis, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.
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