The Peak Activity Levels indicator displays support and resistance levels from prices accompanied by significant volume . The indicator includes a histogram returning the frequency of closing prices falling between two parallel levels, each bin shows the number of bullish candles within the levels.
The Peak Activity Levels indicator displays support and resistance levels from prices accompanied by significant volume . The indicator includes a histogram returning the frequency of closing prices falling between two parallel levels, each bin shows the number of bullish candles within the levels.
The indicator can be used to display ready-to-use support and resistance . These are constructed from peaks in volume . When a peak occurs, we take the price where this peak occurred and use it as the value for our level.
If one of the levels was previously tested, we can hypothesize that the level might be used as support/resistance in the future. Additional analysis using volume can be done in order to confirm a potential bounce.
The histogram can return various information to the user. It can show if the price stayed within two levels for a long time and if the price within two levels was mostly made of bullish or bearish candles.
In the chart above, we can see that over the most recent 200 bars (determined by Histogram Window) 68 closing prices fall between levels A and B, with 27 bars being bullish .
Additionally, the width of a bin and its length can sometimes give information about the volatility of a specific price variation. If a bin is very wide but short (a low number of closing prices fallen within the levels) then we can conclude a most of the movement was done on a short amount of time.
This indicator uses a simple time series forecasting method derived from the similarity between recent prices and similar/dissimilar historical prices. We named this method "ECHO".
The following indicator is a normalized oscillator making use of the arc tangent sigmoid function (ArcTan), this allows to “squarify” the output result, thus visually filtering out certain variations originally present in the oscillator.