Camarilla Levels

Camarilla Levels are similar to pivot points but are favored by short-term traders for their "tighter" levels. Eight different support and resistance lines are plotted on a daily chart. The indicator was developed by Nick Stott, a successful bonds and financial markets trader, in 1989.

Study Type: Overlay

Description

Helpful for intra-day traders who are looking to trade with or against the trend, Camarilla Levels are calculated taking the prior day's High, Low and Close, then determining 8 intraday levels of support and resistance. Four of the levels appear above yesterday's Close (Resistance), labeled as R3, R4, R5 and R6; 4 levels appear below yesterday's Close (Support), labeled as S3, S4, S5 and S6.

The indicator calculates 4 additional levels to detect further support and resistance, helpful for identifying markets that are in a strong trend. The traditional S1, S2, R1 and R2 levels are "hidden" and replaced by special S5, S6 and R5, R6 levels.

The most important Camarilla levels are the third and fourth, where typical trade actions are shown below:

Calculation

Camarilla Levels are calculated as follows, where: H = previous day’s high, L = previous day’s low, and C = previous day’s Close

(Resistance lines)
R6 = (H / L) * C
R5 = R4 + 1.168 * (R4 - R3)
R4 = [1.1 * (H - L) / 2] + C
R3 = [1.1 * (H - L) / 4] + C

(Support lines)
S3 = C - [1.1 * (H - L) / 4]
S4 = C - [1.1 * (H - L) / 2]
S5 = S4 - 1.168 * (S3 - S4)
S6 = C - (R6 - Close)

Parameters

• Show: (checked) - allows you to show or hide a specific level
• Style: (Line) - the level is drawn using either a Line, Dots, or Dashes
• Color - select the color for the level