Support and Resistance V1

The Support and Resistance V1 indicator identifies and visualizes key horizontal levels of price rejection and support across two different time horizons to help traders pinpoint potential reversal or breakout zones.

Usage

The Usage section describes how the script can be used, with focus on identifying market structure and potential entry zones.

• Identifying Support and Resistance: The indicator plots horizontal lines representing short-term and long-term price ceilings (resistance) and floors (support).
• Trade Zones: The script highlights specific "trade zones" near the short-term levels. These areas, defined by the "Percent of the range" setting, provide a buffer where traders might look for price action confirmations.
• Trend and Range Analysis: When price is contained between the long-term support and resistance, the market is viewed as range-bound. A breakout above or below these levels can signal a shift in market sentiment.
• Breakouts: Alerts are integrated to notify users when the closing price breaks through the short-term resistance or support levels.

Details

This tool calculates levels based on high and low points within specific lookback windows.

• Short-Term Levels: Use a smaller lookback window to capture recent price pivots.
• Long-Term Levels: Use a larger lookback window to identify more significant historical levels that may carry more weight.
• Dynamic Trade Limits: The indicator calculates a "trade limit" based on a percentage of the total range between short-term resistance and support. This helps in visualizing the proximity of price to key levels relative to the current volatility.

Settings

• lookback window 1: Determines the period used to calculate short-term support and resistance levels.
• lookback window 2: Determines the period used to calculate long-term support and resistance levels.
• Percent of the range to use for trade zone: Defines the width of the trade zone as a percentage of the distance between the short-term support and resistance.

FAQ

How do I use the trade zones?

The trade zones represent areas where price is nearing a historical pivot. Traders often look for exhaustion or reversal patterns within these zones.

What is the difference between the thin and thick lines?

Thin lines represent short-term levels based on the first lookback window, while thicker, semi-transparent lines represent long-term levels based on the second lookback window.

How can I get access to Support and Resistance V1?

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