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1. Determine a stock's highest price, lowest price and closing price from the prior trading day. Calculate the sum of these numbers and divide your result by 3 to calculate the pivot point for the current day. For example, if a stock reached a high of $10, a low of $9 and closed at $9.50, calculate the sum of these prices to get $28.50. Divide this by 3 to get a pivot point of $9.50.
2. Multiply the pivot point by 2. Then subtract the stock's low to calculate the first resistance level, R1. In the example, multiply $9.50 by 2 to get $19. Subtract $9 to get an R1 of $10.
3. Multiply the pivot point by 2. Then subtract the stock's high to calculate the first support level, S1. In the example, multiply $9.50 by 2 to get $19. Subtract $10 to get an S1 of $9.
4. Subtract S1 from R1. Add the pivot point to your result to get the second resistance level, R2. In the example, subtract $9 from $10 to get $1. Add $9.50 to get an R2 of $10.50.
5. Subtract S1 from R1. Subtract your result from the pivot point to get the second support level, S2. In the example, subtract $9 from $10 to get $1. Subtract $1 from $9.50 to get an S2 of $8.50.
6. Subtract the stock's low from the pivot point. Multiply the result by 2. Then add the stock's high to your result to calculate the third resistance level, R3. In the example, subtract $9 from $9.50 to get 50 cents. Multiply this by 2 to get $1. Then add $10 to $1 to get an R3 of $11.
7. Subtract the pivot point from the stock's high. Multiply the result by 2. Then subtract your result from the stock's low to calculate the third support level, S3. In the example, subtract $9.50 from $10 to get 50 cents. Multiply this by 2 to get $1. Then subtract $1 from $9 to get an S3 of $8.
8. Draw horizontal lines on the stock's chart at the pivot point's price and at the price of each support and resistance level. In the example, draw a horizontal line at $9.50 to represent the pivot point, and draw a horizontal line at the price of each support and resistance level.