DeMark Pivots: Conditional Levels From Open vs Close

Key Takeaways

• The X value is conditional: if Close less than Open use H + 2L + C; if Close greater than Open use 2H + L + C; if equal use H + L + 2 * Open.
• DeMark publishes only one resistance (R1) and one support (S1) level around the central PP, in contrast to the multi-level systems.
• Investors confuse DeMark with floor pivots; the conditional logic produces meaningfully different levels on sessions where the close and open diverge.
• DeMark pivots are designed to lean in the direction of yesterday's open-to-close bias, capturing inertia into the next session.

What It Is

The DeMark method is part of a broader family of indicators created by Tom DeMark, including TD Sequential and the TD Demand and Supply lines. The pivot system specifically uses the relationship between the previous session's open and close as a regime classifier, then plugs the inputs into one of three formulas accordingly.

The output is sparse: a single PP and one upper and lower level. This minimalism is deliberate. DeMark argued that markets respect only one or two well-chosen reference points per session, and adding more levels invites noise rather than precision.

The Intuition

The previous session's open-to-close direction is a regime indicator. A close above the open suggests buying pressure persisted into the bell; the day's value area is biased up. A close below the open suggests selling pressure dominated; the value area is biased down. The X formula is constructed to weight the prior extreme in the direction of the bias.

When close exceeds open, the formula doubles the high and adds the low plus the close, anchoring X toward the upper part of the prior range. When close falls below open, the formula doubles the low and anchors X toward the lower part of the range. The resulting PP, R1, and S1 levels tilt with the prior session's character rather than treating every day identically.

How It Works

Let O, H, L, C denote the prior session's open, high, low, and close. The DeMark formulas are:

If C < O:  X = H + 2L + C
If C > O:  X = 2H + L + C
If C = O:  X = H + L + 2O

PP = X / 4
R1 = X / 2 - L
S1 = X / 2 - H

There is no R2/S2 in the canonical DeMark setup. Some platforms add them by extending the floor-pivot logic, but those extensions are not part of the original method.

Practical use is binary. Treat PP as the day's reference and R1/S1 as the day's likely range boundary. If price opens between S1 and R1 and the prior bias matches your directional view, position toward the bias-aligned extreme.

Worked Example

Suppose yesterday's session printed:

• Open: 100.00
• High: 102.00
• Low: 98.00
• Close: 101.50 (close above open, so X = 2H + L + C)

X = 2 * 102 + 98 + 101.5 = 403.5.

• PP = 403.5 / 4 = 100.875
• R1 = 403.5 / 2 - 98 = 103.75
• S1 = 403.5 / 2 - 102 = 99.75

Compare to floor pivots: floor PP would be 100.50, R1 = 103.00, S1 = 99.00. The DeMark levels sit higher because the close was above the open, biasing the levels up. A trader expecting follow-through after yesterday's bullish close would find DeMark levels better aligned with the directional thesis.

If yesterday had closed at 98.50 (below open of 100.00), the formula would use X = H + 2L + C = 102 + 196 + 98.5 = 396.5. Then PP = 99.125, R1 = 100.25, S1 = 96.25. The levels skew lower, capturing the prior bearish bias.

Common Mistakes

1. Picking the wrong X formula. The conditional selection is the entire edge. Always re-check whether yesterday closed above, below, or equal to its open before computing.
2. Adding fabricated R2/S2 levels. The canonical DeMark system has only one set of levels per side. Synthetic extensions are not DeMark; they are floor-style overlays.
3. Ignoring the equality case. Sessions where C = O exactly are rare but real. Use the third formula rather than defaulting to the close-greater-than-open case.
4. Confusing DeMark pivots with DeMark Sequential. The Sequential 9-13 setup is a separate DeMark indicator and counts bars rather than computing horizontal levels.
5. Using DeMark on illiquid instruments. The open-versus-close signal is noisy when overnight liquidity is thin and the print is unreliable.

Frequently Asked Questions

What are DeMark pivot points in simple terms? DeMark pivot points are a single set of intraday support, pivot, and resistance levels calculated from the prior session's open, high, low, and close, with the formula changing based on whether yesterday closed above or below its open. They lean with the prior day's bias.

How do DeMark pivots affect trading decisions? Traders use PP as the day's reference and R1 or S1 as a one-sided target depending on the prior session's open-to-close direction. The levels tend to align with continuation trades on trending days and mean-reversion trades on inside days.

What is a real-world example of DeMark pivots? On a stock that closes near its high after a strong day, DeMark pivots project R1 noticeably higher than floor pivots. If the next session opens at PP and rallies, R1 frequently acts as the first meaningful resistance.

How can investors use DeMark pivots effectively? Mark the conditional levels before the open, treat R1 and S1 as the day's likely range boundary, and align position direction with yesterday's close-versus-open relationship to lean with prior momentum.

How are DeMark pivots different from floor pivots? Floor pivots use a single formula every day. DeMark pivots use one of three formulas depending on whether the prior close was above, below, or equal to the prior open, producing levels that adapt to the prior session's character.

Sources

1. MyPivots. DeMark Pivot Points. https://www.mypivots.com/dictionary/definition/57/demark-pivot-points
2. Tradingpedia. Fibonacci Pivot Points, DeMark Calculation. https://www.tradingpedia.com/forex-trading-indicators/fibonacci-pivot-points-demark-calculation/
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.