Support/Resistance

The Support/Resistance indicator tool identifies key horizontal levels of price rejection by combining RSI, Chande Momentum Oscillator (CMO), and Pivot Point calculations to highlight significant market floors and ceilings.

Usage

The Usage section focuses on identifying potential reversal zones where price may stall or change direction. The indicator plots these levels as circles on the chart, providing a visual reference for active support and resistance.

• Support Identification: A support level (green circles) is plotted when the RSI indicates oversold conditions and the CMO signals a specific momentum shift alongside a low pivot point. Traders often look for long entries or profit-taking on shorts near these zones.
• Resistance Identification: A resistance level (red circles) is established when the RSI indicates overbought conditions and the CMO confirms downward momentum alongside a high pivot point. Traders often use these levels to seek short entries or exit long positions.

Details

The script executes a multi-step calculation to ensure levels are only formed during specific market conditions:

1. RSI (Relative Strength Index): Used to determine if the asset is in an overbought (>75) or oversold (<25) state.
2. CMO (Chande Momentum Oscillator): Calculated using Hull Moving Average (HMA) processed sources to filter momentum direction.
3. Pivot Points: The script identifies localized high and low price pivots over a lookback period to pin the horizontal levels to actual price extremes.
4. Multi-Timeframe Logic: The levels are requested via security calls, allowing users to project support and resistance from specific timeframes onto their current chart.

Settings

• SR1 Timeframe: Defines the timeframe used to calculate and display the Support (SR1) levels.
• SR2 Timeframe: Defines the timeframe used to calculate and display the Resistance (SR2) levels.

FAQ

How do I use these levels for trading?

Support and resistance levels are typically used to identify areas where the price might bounce or break through. Many traders use them to set stop-loss orders or take-profit targets.

Why do the levels appear as circles?

The circles represent the specific price points identified by the algorithm's conditions. These levels persist until a new condition is met, creating a horizontal line of dots.

How can I access the Support/Resistance indicator?

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