L1 Mel Widner Auto Support and Resistance

The L1 Mel Widner Auto Support and Resistance indicator is a technical analysis tool that identifies key price levels and market momentum shifts by automating the detection of support and resistance. It provides traders with a precise comparison of current prices against historical turning points to help determine the strength of market trends.

Usage

The script generates two primary oscillators—the Widner Support Oscillator (WSO) and the Widner Resistance Oscillator (WRO)—to visualize market dynamics:

• WSO (Widner Support Oscillator): Measures the current closing price against the most recent support levels. A high WSO value indicates that the price is holding above historical support, while a low value suggests support is being broken.
• WRO (Widner Resistance Oscillator): Measures the current closing price against the most recent resistance levels. High values suggest the price is struggling against resistance, while low values indicate a breakout or weak resistance.
• Signal Logic: Traders can look for long entries when support is building (WSO increasing) or when the Support Oscillator crosses above the Resistance Oscillator at oversold levels. Conversely, sell signals are generated when resistance strengthens or when the Resistance Oscillator crosses below the Support Oscillator at overbought levels.

Details

Based on Mel Widner's "Automatic Support and Resistance" article from the May 1998 issue of Technical Analysis of Stocks and Commodities, this tool treats price movements like physical momentum. Just as a ball thrown upward slows under gravity before reversing, price advances slow down as they encounter resistance.

The indicator mathematically defines these turning points by tracking the highest highs (resistance) and lowest lows (support) over a specific period. The WSO and WRO quantify the relationship between the current price and these historical levels using a specific formula that integrates momentum changes:

• WSO Formula: 100 * (1 - (Sum of (Support Levels / Close)) / Length)
• WRO Formula: 100 * (1 - (Sum of (Resistance Levels / Close)) / Length)

The script utilizes the Arnaud Legoux Moving Average (ALMA) to smooth these oscillators, reducing noise while maintaining responsiveness to price action.

Settings

• Strength: Determines the lookback period used to identify the local highs and lows that form support and resistance levels.
• Length: Sets the number of historical support/resistance levels to be included in the oscillator calculations (default is 6).
• Average Length: Controls the smoothing period of the ALMA filter applied to the resulting oscillators.

FAQ

How do I interpret the oscillator values? Values range typically from 0 to 100 (or smoothed variants). A value of 100 means the current close is above all tracked support/resistance levels, while 0 means it is below all of them.

What do the "BUY" and "SELL" labels indicate? Labels are generated based on crossovers between the WSO and WRO. A BUY label appears when the Support Oscillator crosses above the Resistance Oscillator at lower extremes, and a SELL label appears when the Resistance Oscillator crosses below the Support Oscillator at higher extremes.

How can I access this indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.