Support and Resistance with MACD Indicator

The Support and Resistance with MACD Indicator tool combines pivot-based support and resistance levels with MACD momentum filtering to identify high-probability breakout and breakdown entries. By integrating volume analysis and trend-following moving averages, the script provides a comprehensive framework for navigating trending markets while minimizing false signals during consolidation.

Usage

The indicator identifies potential trade entries based on the interaction between price, key pivot levels (Support/Resistance), and MACD momentum.

• Buy Signals: Occur when price breaks through a resistance level (topShift) with positive MACD momentum (delta > 0) and high relative volume.
• Sell Signals: Occur when price breaks below a support level (botShift) with negative MACD momentum (delta < 0) and high relative volume.
• Moving Average Filter: Users can enable the "Show MA" option to see the DEMA and TEMA relationship. A green DEMA suggests bullish conditions, while a red DEMA suggests bearish conditions. It is recommended to align signals with the color of the trend line.
• Visual Elements:
  • Dotted Black Line: Represents the entry level at the time of the signal.
  • Solid Red/Green Line with Diamonds: Acts as a trailing stop-loss based on pivot levels and ATR.
  • Dotted White Line: Highlights the maximum profit point reached during the current trade.

Details

The script utilizes a combination of technical analysis methods to confirm price action:

• Pivot Points: Calculates support and resistance levels using a 10-bar lookback/lookahead window.
• MACD Filtering: The difference between the MACD line and the Signal line (Delta) ensures that entries are supported by momentum, helping to filter out "exhaustion" breakouts.
• Volume Validation: Entries are only triggered if the current volume exceeds its 20-period moving average, ensuring institutional participation in the move.
• Trend Smoothing: Uses Double Exponential Moving Averages (DEMA) and Triple Exponential Moving Averages (TEMA) to provide a cleaner visual representation of the underlying trend compared to standard EMAs.

Settings

General Settings

• Volume MA Length: Determines the lookback period for the volume moving average used to validate entry signals.
• Show MA: Toggles the visibility of the DEMA/TEMA trend lines and auxiliary 50/200 EMAs on the chart.

FAQ

How do I access Support and Resistance with MACD Indicator?

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

What markets does this indicator work best in?

The indicator is designed for trending or "continuous" markets. It may produce more frequent signals during sideways consolidation, so waiting for a retest or trend alignment is advised.

Can I set alerts for the signals?

Yes, the script includes built-in alerts for Buy and Sell entries, as well as Long and Short exit signals based on the trailing stop-loss.