Camarilla Pivots: Eight Intraday Reversal Levels

Key Takeaways

• The central pivot is the same as floor pivots, but the support and resistance levels use prior close plus or minus the range times 1.1 / N for N in {12, 6, 4, 2}.
• H3 and L3 are reversal zones inside the prior range; H4 and L4 are breakout triggers beyond it.
• Investors over-trade Camarilla by treating every level as a signal; the system is designed around the H3/L3 reversal and H4/L4 breakout logic.
• Camarilla levels sit closer to the close than floor levels because the multipliers are smaller, which suits range-bound markets.

What It Is

Camarilla produces nine values per session: a central pivot point and four resistance levels (H1 to H4) above the prior close plus four support levels (L1 to L4) below the prior close. The H/L notation reflects the original Stott naming; some platforms label these R1 to R4 and S1 to S4 instead.

The defining feature is the multiplier sequence 1.1 / 12, 1.1 / 6, 1.1 / 4, 1.1 / 2, applied to the prior range. The H3/L3 pair sits roughly inside the prior range and acts as a fade boundary in normal market conditions. The H4/L4 pair sits outside the prior range and acts as a confirmed breakout level when broken with momentum.

The Intuition

Stott's empirical observation was that, on average, markets respect the prior range about three out of four sessions. If you assume mean reversion within the prior range and trend-following only on a clean break of that range, you need two sets of levels: a reversion zone and a breakout zone.

The 1.1 multiplier expands the range slightly to account for noise. The four denominators (12, 6, 4, 2) build the four levels with smooth geometric spacing. The result is a set of levels that quantifies "still inside the prior range" versus "decisively outside it" without requiring discretionary judgment.

How It Works

Let H, L, and C denote the previous session's high, low, and close, and let range = H - L. The Camarilla formulas are:

PP = (H + L + C) / 3
H1 = C + range * 1.1 / 12
H2 = C + range * 1.1 / 6
H3 = C + range * 1.1 / 4
H4 = C + range * 1.1 / 2
L1 = C - range * 1.1 / 12
L2 = C - range * 1.1 / 6
L3 = C - range * 1.1 / 4
L4 = C - range * 1.1 / 2

The trading rules from Stott's original method follow two playbooks:

1. Reversal at H3 or L3. When price opens between L3 and H3 and rallies to H3, fade with a stop above H4. When it falls to L3, buy with a stop below L4. Target the opposite side or the pivot.
2. Breakout at H4 or L4. When price breaks H4 with momentum, go long with a stop back inside H3. Target H5, which most platforms compute as H4 + 1.168 * (H4 - H3). The symmetric rule applies to L4 breakdowns.

Worked Example

Suppose yesterday's session closed at 100, with a high of 102 and low of 98. The range is 4.

• H1 = 100 + 4 * 1.1 / 12 = 100.37
• H2 = 100 + 4 * 1.1 / 6 = 100.73
• H3 = 100 + 4 * 1.1 / 4 = 101.10
• H4 = 100 + 4 * 1.1 / 2 = 102.20
• L1 = 99.63, L2 = 99.27, L3 = 98.90, L4 = 97.80

Today's session opens at 100.20, just above the prior close. Price rallies to 101.05, stalls near H3 at 101.10, and prints a rejection candle. A short at 101.10 with a stop above H4 at 102.20 risks 1.10 to potentially make 1.20 back to PP at 100.00. Bullish traders, meanwhile, look for a clean break of H4 with momentum as a confirmed breakout setup targeting H5 near 103.50.

Common Mistakes

1. Trading H1, H2, L1, L2 as primary signals. Those levels are too close to the close to be meaningful entries. The Camarilla edge is at H3/L3 and H4/L4.
2. Forgetting the breakout vs reversal logic. H3 is a reversal zone in range days, but a continuation level on trending days once H4 has been broken. The bias regime matters.
3. Ignoring overnight gaps. A large gap relative to the prior range distorts the levels' relevance. Skip Camarilla on gap days or recompute on the day's opening range.
4. Using daily Camarilla on a 5-minute scalp. The levels reflect daily structure; intraday scalpers need intraday range inputs to get appropriately scaled levels.
5. Combining Camarilla with too many other indicators. The method is self-contained. Layering moving averages, MACD, and RSI on top often produces conflicting signals.

Frequently Asked Questions

What are Camarilla pivot points in simple terms? Camarilla pivot points are eight horizontal price levels (H1 to H4 above and L1 to L4 below) plus a central pivot, derived from the prior session's close and range using a fixed set of multipliers. They mark intraday reversal and breakout zones.

How do Camarilla pivots affect trading decisions? Traders fade price at H3 and L3 expecting a return to the central pivot, and treat breaks of H4 or L4 as trend triggers in the direction of the break. The system gives an objective rule set for both range and breakout days.

What is a real-world example of Camarilla pivots? On a quiet trading day in a large-cap stock, price often touches H3 or L3 once or twice and reverses back through the central pivot. On a news-driven day, you see a clean break of H4 on heavy volume and a sustained move toward the H5 projection.

How can investors trade H3 to L3 effectively? Wait for price to reach H3 or L3, look for a rejection candle or volume divergence, and enter against the move with a stop just beyond H4 or L4. Target the central pivot first and the opposite L3 or H3 as a stretch.

How are Camarilla pivots different from floor pivots? Floor pivots derive levels from the central pivot using twice PP minus the prior high or low. Camarilla derives levels from the prior close using fixed multipliers of the prior range. Camarilla levels sit closer to the close and are designed for short-term mean reversion.

Sources

1. MyPivots. Camarilla Pivot Points. https://www.mypivots.com/dictionary/definition/42/camarilla-pivot-points
2. TradingView. Camarilla Pivot Points indicator family. https://www.tradingview.com/scripts/camarilla/
3. Forex Training Group. Comparing the Different Types of Pivot Points. https://forextraininggroup.com/comparing-different-types-pivot-points/
4. Babypips School. Other Pivot Point Calculation Methods. https://www.babypips.com/learn/forex/other-pivot-point-calculation-methods

Disclaimer

This article is educational content only and is not financial advice. Nothing here is a recommendation to buy, sell, or hold any security. Consult a licensed advisor before making investment decisions.