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Calculates the first price ceiling above the pivot point from prior period data, exposing a derived level where selling pressure may concentrate.
Resistance 1 (R1) is the first resistance level above the pivot point, calculated from the previous period's price range. It marks a potential area where selling pressure may increase.
Resistance 1 (R1) is the first resistance level calculated from pivot point analysis, representing a potential price ceiling above the central pivot point. When price rises from the pivot, R1 is the first level where selling pressure may emerge to halt the advance. As a widely watched level, R1 often sees increased trading activity and potential reversals.
The calculation:
Resistance 1 (R1) = (2 × Pivot Point) - Previous Low
Example:
Previous High: $55 Previous Low: $45 Previous Close: $50 Pivot Point: ($55 + $45 + $50) / 3 = $50 R1: (2 × $50) - $45 = $55
Why R1 matters:
- First resistance level: Initial level where rally may stall
- Widely watched: Many traders monitor and trade around R1
- Profit target zone: Common target for long positions
- Breakout level: Break above R1 signals strength toward R2
Interpreting price action at R1:
- Rejection at R1: Resistance holding; potential short entry
- Break above R1: Resistance failed; price may test R2
- Multiple tests: Repeated tests may weaken resistance
- Volume at R1: High volume increases significance of reaction
Trading applications:
- Short entries: Sell rejections at R1 with stops above
- Long targets: Use R1 as profit target for longs from below
- Breakout trades: Buy when R1 breaks with confirmation
- Risk management: Place stops just above R1 for shorts
R1 in context:
- Below pivot: Market bearish; R1 unlikely to be tested
- Between pivot and R1: Mild bullish; R1 test possible
- Above R1: Bullish; next target is R2
Combining with other analysis:
- Confluence: R1 at moving average increases significance
- Trend filter: Trade R1 breakouts in uptrends, rejections in downtrends
- Volume confirmation: Watch for volume spike at R1 test
- Candlestick patterns: Look for reversal patterns at R1
Limitations:
- Not guaranteed: Resistance can fail, especially in strong uptrends
- Approximate level: Price may reverse near R1, not exactly at it
- Context matters: Less effective against strong trends
R1 provides traders with the first objective resistance level for the session. It serves both as a profit target for longs and potential entry for shorts, making it a key level in intraday trading.