How pivot system is set up?

<p id="isPasted">A pivot system in trading is set up by first calculating a central Pivot Point (PP) using the previous day's high, low, and closing prices. Next, two resistance (R1, R2, R3) and two support (S1, S2, S3) levels are calculated from the PP using specific formulas, which act as potential price barriers for the current trading day. Traders then use these levels, often viewed with other indicators, to identify potential entry and exit points for intraday trades. &nbsp;</p><p><br><strong>Step 1: Gather previous day's data&nbsp;</strong></p><ul data-hveid="CBEQAQ" data-ved="2ahUKEwiLncyghryQAxWezjgGHXCTHrgQm_YKegQIERAB" style="margin: 10px 0px 20px; padding: 0px; font-size: 16px; line-height: 24px; padding-inline-start: 16px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Arial, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(31, 31, 31); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" id="isPasted"><li style="margin: 0px; padding: 0px; padding-inline-start: 4px; list-style: inherit;">Collect the High, Low, and Close prices from the previous trading session.&nbsp;</li></ul><p> &nbsp;</p><p><strong>Step 2: Calculate the Pivot Point (PP) &nbsp;</strong>&nbsp; &nbsp;</p><ul><li id="isPasted">The formula is:&nbsp;<p>PP=(High+Low+Close)/3cap P cap P equals open paren cap H i g h plus cap L o w plus cap C l o s e close paren / 3</p>.&nbsp;</li><li>This is the central point of the system.&nbsp;</li></ul><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;</p><p><strong>Step 3: Calculate support and resistance levels</strong>&nbsp; &nbsp; &nbsp;</p><ul><li id="isPasted">Resistance 1 (R1):&nbsp;<p>(2×PP)−Lowopen paren 2 cross cap P cap P close paren minus cap L o w</p></li><li>Support 1 (S1):&nbsp;<p>(2×PP)−Highopen paren 2 cross cap P cap P close paren minus cap H i g h</p></li><li>Resistance 2 (R2):&nbsp;<p>PP+(High−Low)cap P cap P plus open paren cap H i g h minus cap L o w close paren</p></li><li>Support 2 (S2):&nbsp;<p>PP−(High−Low)cap P cap P minus open paren cap H i g h minus cap L o w close paren</p></li><li>Resistance 3 (R3):&nbsp;<p>High+2×(PP−Low)cap H i g h plus 2 cross open paren cap P cap P minus cap L o w close paren</p></li><li>Support 3 (S3):&nbsp;<p>Low−2×(High−PP)cap L o w minus 2 cross open paren cap H i g h minus cap P cap P close paren</p>&nbsp;</li></ul><p><strong>Step 4: Apply the pivot system in trading</strong>&nbsp; &nbsp; &nbsp;</p><p>Identify the trend: If the price is trading above the PP, it suggests a bullish trend; if below, it suggests a bearish trend. &nbsp;</p><p><strong>Look for entry points: </strong></p><p>Long (buy): If the price opens above the PP, a trader might go long, expecting it to reach R1 or R2. &nbsp;Short (sell):&nbsp;</p><p>If the price opens below the PP, a trader might go short, expecting it to reach S1 or S2. &nbsp;</p><p><strong>Set targets and stop-losses: </strong></p><ul><li>The support and resistance levels act as potential profit targets. &nbsp;</li><li>For example, if a trader goes long at the PP, R1 would be a possible target. &nbsp;</li><li>Combine with other indicators: It is recommended to use pivot points with other technical indicators like moving averages or candlestick patterns for confirmation. </li></ul>