• The Camarilla pivot point is a technical indicator used to analyse the stock market.
• It is used by traders to find the entry and exit points with the help of support and resistance levels. The Camarilla pivot consists of 4 support and resistance levels.

Formulae used to calculate the Camarilla pivot point:

1. Fourth Resistance (R4) = Close + ((High – Low) * 1.5)
2. Third Resistance (R3) = Close + ((High – Low) * 1.25)
3. Second Resistance (R2) = Close + ((High – Low) * 1.166)
4. First Resistance (R1) = Close + ((High – Low) * 1.083)
5. Pivot Point = (High + Low + Close) / 3
6. First Support (S1) = Close – ((High – Low) * 1.083)
7. Second Support (S2) = Close – ((High – Low) * 1.166)
8. Third Support (S3) = Close – ((High – Low) * 1.25)
9. Fourth Support (S4) = Close – ((High – Low) * 1.5)

• Camarilla pivot indicator can be used when the price is moving in the horizontal direction, i.e., the price trades in a range.
• Here, the price ranges between S3 and R3. This range is referred to as the daily price range, which benefits the intraday traders.
• Short-term traders can enter the market and initiate their short positions when the price touches R3, because price reverts back to S3.
• Similarly, the short-term traders can enter the market and initiate their long positions when the price touches S3. It is because the price reverts back to R3.
• The above trades turn successful only when the market is less volatile. If the market is volatile, the price might move out of the range.

• Camarilla pivot indicator can also be used when the price is moving in a particular direction, i.e., either upward trend direction or downward trend direction.
• In such cases, traders should make use of the extreme support and resistance levels too.
• If there is an upward trend, traders can enter the market at S3 and place a stop loss  at S4. They can stay in the trade until the price reaches R4, which should be the exit point. 
• Similarly, if there is a downward trend, traders can enter the market at R3 and place a stop loss order at R4. They can stay in the trade until the price reaches S4, which should be the exit point.
• The main disadvantage of the Camarilla pivot indicator is that the indicator leads to false results when there is a high price volatility.
• Moreover, it is not beneficial for the long-term traders. Hence, traders need to ensure the market conditions before using this indicator or else they may fall into losses.