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NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis

Using the classic pivot point formula based on the previous day's data, a stock had High Rs 220, Low Rs 200 and Close Rs 210. What is the first resistance level R1 (R1 = 2 x Pivot - Low)?

R1 is Rs 220. The pivot is the average of high, low and close, (220+200+210)/3 = 210. Then R1 equals twice the pivot minus the previous low, which is 420 minus 200, giving 220.

  1. ARs 220Correct
  2. BRs 230
  3. CRs 210
  4. DRs 240

Explanation

Pivot = (220+200+210)/3 = 210. R1 = 2 x 210 - 200 = 220. Rs 230 would result from wrongly using 2 x Pivot - 190 style errors, and Rs 210 is only the pivot itself.

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