Pivot Points are a technical analysis indicator derived from the high, low, and closing prices of a previous trading period, used to project potential support and resistance levels for the current period. For example, if a stock closed strongly yesterday, its pivot point might suggest higher resistance levels today. Pivot Points consist of a central pivot level (P) and several support (S1, S2, S3) and resistance (R1, R2, R3) levels calculated from the previous day's trading range. These levels act as gravitational forces for price, often attracting price action or causing it to reverse. For instance, if the price of XYZ stock opens above its daily pivot point (P) and then approaches R1, traders might look for signs of a reversal or a potential breakout through R1. Conversely, if the price drops to S1, it could be a buying opportunity if other indicators confirm bullish sentiment, or a signal to exit long positions if it breaks below S1 with conviction. These levels are dynamic and refresh with each new trading period, providing a fresh perspective daily.