Support and Resistance levels - DMI - DI trailing stop lines

The Support and Resistance levels - DMI - DI trailing stop lines tool plots dynamic horizontal levels based on Directional Movement Index (DMI) crossovers to provide objective support, resistance, and trailing stop references.

Usage

The indicator is primarily used to define risk and identify key structural levels within a trend-following system. It tracks the interaction between the Positive Directional Indicator (DI+) and the Negative Directional Indicator (DI-).

• Support Levels: When the DI+ crosses above the DI- (a bullish signal), the indicator identifies the low of the signal bar. This level acts as a support zone or a trailing stop for long positions.
• Resistance Levels: When the DI+ crosses below the DI- (a bearish signal), the indicator identifies the high of the signal bar. This level serves as a resistance zone or a trailing stop for short positions.

By using these price-based levels alongside the DMI system, traders can exit losing trades more efficiently if the price breaches these stops before a trend reversal is fully confirmed by the DMI lines.

Details

The script calculates the Directional Movement Index components, including the Plus Directional Movement (+DM), Minus Directional Movement (-DM), and the True Range (TR). These values are smoothed using a Relative Moving Average (RMA) over a user-defined period.

The core logic focuses on the specific price action occurring at the exact moment of a "DI Cross." Unlike traditional DMI strategies that rely solely on the lines remaining crossed, this script "locks" the price high or low at the time of the crossover. This creates a static horizontal level that persists until the next crossover occurs, making it easier to visualize market structure and set precise stop-loss orders.

Settings

• DI length: Determines the lookback period used to calculate the Directional Movement Index components. A higher value results in smoother lines and fewer, more significant crossovers, while a lower value makes the levels more reactive to short-term price fluctuations.

FAQ

How do I interpret the Support and Resistance levels? The red circles represent resistance levels established at the high of a bearish DI cross, while the green circles represent support levels established at the low of a bullish DI cross. These levels remain active until a new crossover occurs.

Can this be used for trend confirmation? While the levels themselves are derived from trend momentum (DMI), they are best used as exit points or entry filters. If price is trading above the support level, the bullish bias remains intact; if it breaks below, the trend may be weakening.

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