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Pivot indicator works well, need explanation based on code
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Pivot indicator works well, need explanation based on code

  #1 (permalink)
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Futures Experience: Intermediate
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Pivot indicator works well, need explanation based on code

I just found a site that hasn't been updated in a while but had an interesting pivot indicator I wanted to check out. I threw it up on a few charts and it seems to work really well for futures but not so much for stocks. It looks like it calculates the previous days high and low as well as the over night high and low and creates pivots based on those (although it doesn't seem exact). That's just from looking though. I attempted to decipher some of the code, but I have zero knowledge there. I'd really appreciate if someone could explain to me exactly what this indicator does based on the code which you can find here...

http://shadowtrader.net/images/thinkscript_STpivots.txt

TLDR; explain what this indicator does based on the code please

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  #2 (permalink)
1.Fibs 2.??? 3.Profit
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The meat of the code is this (the rest is mostly formatting: colors, linetype, hiding):

 
Code
input _high  = 1043.75;
input _low   = 1033.50;
input settle = 1041.50;

{
    PP = (_high + _low + settle) / 3;
    R1 = (2 * PP) - _low;
    S1 = (2 * PP) - _high;
    R2 = PP + (r1 - s1);
    S2 = PP - (r1 - s1);
    R3 = _high + 2 * (PP - _low);
    S3 = _low - 2 * (_high - PP);
}

Inputs are what you manually enter, in this case it is 3 parameters, _high, _low & settle. Previous day, high, low and close.

For the plots there are 7:
PP = Pivot Point
R1 = Resistance 1
S1 = Support 1
etc.

The formula is just substituting the abbreviations for the numbers:
PP = (_high + _low + settle) / 3;

_high, _low & settle are the inputs you manually entered. It is adding them and then dividing by 3. That value is PP which is then plotted.

PP = (1043.75 + 1033.50 + 1041.50) / 3
PP = 1,039.58


It calculates PP first to use it on the next plot:

R1 = (2 * PP) - _low;

In this one it is multiplying 2 times the value of PP it just calculated, then subtracting that to the manual input _low.

R1 = (2 * 1,039.58) - 1033.50
R1 = 1,045.66


The rest is the same; just substituting the names (PP,R1,etc) for the values.

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