Pivot Point Day Trading: PP, R1, S1 Tactics

The central pivot (PP) is the day's bias line; R1 and S1 are the first targets and reaction zones. Three mechanical tactics turn these into intraday trades.

The PP bias rule

Compute PP = (prior H + L + C) / 3. At the open:

• Open above PP: bullish bias. Prefer longs; use pullbacks to PP as entries.
• Open below PP: bearish bias. Prefer shorts; use rallies to PP as entries.
• Open at PP: wait. Bias forms on the first 30-min close above or below PP.

This single rule filters out roughly half of counter-trend trades. Only take longs above PP, shorts below — unless a confirmed break flips the bias.

Tactic 1: The PP bounce

1. Price opens above PP, pulls back to PP on the 5- or 15-min chart.
2. Wait for a bullish reversal candle (hammer, engulfing) closing above PP.
3. Enter long. Stop: 1×ATR below PP. Target: R1.

If price opens below PP, mirror the setup: rally to PP, bearish candle, enter short, stop above PP, target S1.

Tactic 2: R1/S1 as first target and reversal zone

R1 and S1 are hit on most sessions. Use them two ways:

• As targets: scale out 50% at R1 (longs) or S1 (shorts). Move stop to break-even.
• As reversal zones: if price reaches R1 in the first 90 minutes on weak volume (below 20-period average), fade R1 back toward PP. Stop: 2 ticks beyond R1. Target: PP. This works when the open was a slow drift, not a drive.

Tactic 3: The R1 break to R2

When price breaks R1 with a 5-min close above it on 1.5× average volume:

1. Enter long on the retest of R1 (now support).
2. Stop: 2 ticks below R1. Target: R2.
3. If R2 is reached within the same session, scale out 75%; trail the rest under R1.

Mirror for S1 break to S2. Breaks that fail to retest (price runs without pulling back) are usually news-driven — do not chase; wait for the retest or stand aside.

Filters that raise hit rate

• Higher-timeframe alignment: only take PP-bounce longs if the daily trend is up (price above 20-EMA). Counter-trend PP bounces fail more often.
• Session timing: best reactions at PP, R1, S1 occur in the first 2 hours and the last 90 minutes. Mid-session pivots chop.
• Volume at the level: a reversal candle at R1 on 1.5× average volume is far more reliable than one on half-volume.

PP gives direction; R1/S1 give the levels. Trade the bounce at PP, the target/reversal at R1/S1, and the break toward R2/S2 — each with a defined stop and a structural target.