Larry Williams: Market Structure

The Larry Williams: Market Structure indicator identifies local extrema and connects them to visualize major price swings and medium-term market trends based on the classic three-bar system.

Usage

The tool can be used to identify significant turning points and define the current market phase through a visual zigzag pattern.

• Identifying Trends: An upward structure is identified by a sequence of higher highs and higher lows, while a downward structure is marked by lower highs and lower lows.
• Support and Resistance: The turning points generated by the indicator serve as valid support and resistance levels. A breach of these levels often provides information regarding potential trend development or reversals.
• Intermediate Trend: The indicator includes icons to highlight intermediate-term trend changes. These are defined by filtering short-term highs and lows to find more significant structural shifts.

Details

The script follows Larry Williams' methodology for defining market structure. A local high is defined as a three-bar sequence where the middle bar has the highest high, and the surrounding bars have lower lows than the middle bar's low. Conversely, a local low is a three-bar sequence where the middle bar has the lowest low, and the surrounding bars have higher highs than the middle bar's high.

By identifying these short-term points, the script further extrapolates intermediate-term extrema. An intermediate-term high is any short-term high surrounded by lower short-term highs. This hierarchical approach allows for a cleaner visualization of market trends by filtering out minor price noise.

Settings

• Show Intermediate Trend Change Icons: Toggles the visibility of labels on the chart that indicate when an intermediate-term trend shift has occurred.

FAQ

How do I use the zigzag lines?

The zigzag lines connect local highs and lows to filter out market noise. Use them to identify the broader direction of price movement and find key horizontal support or resistance levels.

What are the labels on the chart?

The labels represent intermediate-term trend changes. A green label pointing up suggests a shift to an intermediate bullish structure, while a red label pointing down suggests a shift to an intermediate bearish structure.

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.