Do you trade in the Indian stock market? Irrespective of Nifty, Bank Nifty, or individual stocks, you might have probably heard traders talk about “support” and “resistance” levels before the market opens.
One of the most popular tools used to find these levels is a simple technical indicator. To say the least, several intraday traders swear by this indicator. This tutorial delves deep into this tool in simple English. It’s so easy to understand that even a beginner can start using it right away, confidently.
What is this Technique?
It’s a mathematical method that uses the previous day’s High, Low, and Close prices to calculate potential turning points for the current trading session. Traders use these levels to decide where a stock or index might reverse direction, and where they should place their entry, target, or stop-loss.
It’s especially popular among intraday and positional traders in India because it’s easy to calculate and works across segments — equity, futures, and options.
How to Calculate the Levels
The central level, called the “Pivot,” is calculated first. All other levels are derived from it.
| Level | Formula |
| Pivot (P) | (Previous High + Previous Low + Previous Close) ÷ 3 |
| Resistance 1 (R1) | (2 × P) − Previous Low |
| Support 1 (S1) | (2 × P) − Previous High |
| Resistance 2 (R2) | P + (Previous High − Previous Low) |
| Support 2 (S2) | P − (Previous High − Previous Low) |
| Resistance 3 (R3) | Previous High + 2 × (P − Previous Low) |
| Support 3 (S3) | Previous Low − 2 × (P − Previous High) |
Most trading apps and charting platforms such as TradingView or your broker’s app calculate these automatically. Hence, you rarely need to do this by hand.
Each Level Explained
| Level | What It Indicates |
| Pivot (P) | The “fair value” line for the day; above it = bullish bias, below it = bearish bias |
| R1, R2, R3 | Potential resistance zones where price may face selling pressure |
| S1, S2, S3 | Potential support zones where price may find buying interest |
How to Use this in Your Trading
- Trend bias: If the price opens and stays above the Pivot, the bias for the day is generally bullish. Below it, bearish.
- Entry points: Several traders buy near support levels (S1, S2) and sell or short near resistance levels (R1, R2), expecting a bounce or reversal.
- Breakout trades: If price breaks strongly through R1 or S1 with volume, it can signal continuation toward R2/R3 or S2/S3.
- Stop-loss placement: Levels just below support (for buyers) or above resistance (for sellers) are commonly used to place stop-losses.
- Confirmation tool: Best when combined with other indicators like moving averages, RSI, or volume, rather than used alone.
Tips for Indian Market Traders
- Since Indian markets (NSE/BSE) run standard sessions, calculate the levels using the previous trading day’s data before the market opens at 9:15 AM.
- Bank Nifty and Nifty futures react strongly to these levels intraday — keep them marked on your chart.
- Around results season or major news events, these levels can get broken quickly, so avoid blindly trusting them on high-volatility days.
- Combine with the day’s volume and Open Interest data (for F&O traders) for better accuracy.
Conclusion
This is a simple, at the same time powerful way to map out potential support and resistance zones before the trading day even begins. While pivot points shouldn’t be your only strategy, they work well as a framework to structure your entries, exits, and risk management.
This is especially for intraday traders navigating India’s fast-moving markets. As with any technique, practice on a demo account first before applying it with real capital.
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Also Read |
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| Exponential Moving Average (EMA)Â | |
| Types of Chart Patterns | |
| Fibonacci Retracement Strategy | |
