Editor: JOHN L. PERSON III, CTA
WEEK ENDING JAN 15, 2004

Using 'pivot points' as support, resistance
01/15/2004
By John Person
(Editor's note: John Person has been analyzing and trading futures for 22 years and is editor of a weekly newsletter, The Bottom Line Futures Report. He also hosts a weekly financial radio show featuring the country's top trading experts, appears regularly on CNBC and is widely quoted in the press. He writes a daily market report on the Chicago Board of Trade web site and speaks at numerous seminars around the country. John Person's book, A Complete Guide to Technical Trading Tactics, published by John Wiley and Sons, will be released in April 2004 revealing more details about when and how to use pivot point analysis. John Person can be reached through his web site at www.nationalfutures.com or contact John Person)

Many traders have probably heard the term "pivot points" and recognize that they have some bearing on price action. However, most individual traders and even brokers are not familiar with the pivot point formula, perhaps because of the time involved in calculating the numbers. But professional traders including myself look at pivot points, so you should probably be aware of what they are. Some recent chart examples below reflect the validity of the pivot point concept.
With "pivot point" in the name, you might guess that these points are very significant to some traders, especially to those "old school" traders who have been following pivot points for many years. A pivot point is simply a computed number based on the high, low and close of the previous price bar, whether the time period is a day, a week or a month. Using that pivot point number, traders calculate support and resistance levels, which are considered to be price brackets for the current time period.

To determine current support/resistance levels, the first step is to find the pivot point number:
PP = (H + L + C)/3

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