Price Action in action

The Price Action in action indicator is a comprehensive toolkit designed to consolidate essential price action elements—support/resistance, candlestick patterns, and volume—into a single overlay. It aims to assist traders in identifying key supply and demand zones based on multi-period RSI extremes while automating the detection of various price patterns to reduce emotional subjectivity in decision-making.

Usage

This tool can be used to identify high-probability reversal or continuation zones by observing how price interacts with automated support and resistance levels. When the price reaches a level marked by the indicator, users should look for the grouped candlestick patterns (indicated by dotted rectangles) to confirm market sentiment.

The indicator differentiates between levels of significance using transparency:

• Level 1 (Default: 7-period RSI): Darkest shade, representing short-term supply/demand.
• Level 4 (Default: 28-period RSI): Lighter shade, representing longer-term supply/demand.

Additionally, a grey diamond appears above candles when the current volume exceeds the 20-period Volume Weighted Moving Average (VWMA), providing a quick visual cue for high-activity bars.

Details

The indicator calculates support and resistance by identifying the highest and lowest price points reached while the RSI (across four customizable periods) is in overbought or oversold territory. This method highlights specific points where historical supply or demand was strong enough to reverse momentum.

For candlestick patterns, the script identifies:

• Single-bar: Doji, Marubozu, Hammer, Inverted Hammer, Spinning Top.
• Two-bar: Engulfing, Inside Bar (Harami), Tweezer, Kicker.
• Three-bar: Morning Star, Evening Star.

Multi-bar patterns are visually grouped with a box to help practitioners learn and identify them more clearly.

Settings

General & RSI Settings

• Don't show RSI/Candlestick: Toggles to hide specific components of the indicator.
• RSI Level (1-4) Length: Sets the periods for the four RSI calculations used to find S/R levels.
• Overbought/Oversold threshold: Defines the RSI boundaries for identifying supply/demand zones.
• Strength of Support/Resistance: Toggles labels that show how many RSI levels coincide at a specific price point.

Trendline Settings

• Extend support/resistance lines to right: Extends the S/R lines across the chart.
• Default support/resistance lines length: Sets a fixed length for lines if not extended.
• Support/Resistance Line color: Customizable colors for horizontal levels.
• Support/Resistance Lines Style: Choose between solid, dotted, or dashed lines.

Candlestick Settings

• Candlestick pattern detection only after bar closing: If enabled, patterns only appear once the bar is confirmed.
• Strict Engulfing/Inside Candle: When enabled, requires the entire range (including wicks) to be contained within the previous candle's body.
• Pattern Thresholds (Doji, Marubozu, Hammer, etc.): Various inputs to fine-tune the sensitivity of pattern detection.

Volume Settings

• Volume Average Period: The period used for the VWMA calculation.
• Current Volume : Average Volume Ratio: Multiplier to determine how much higher volume must be than the average to trigger a signal.

FAQ

How do I access Price Action in action?

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

Why are some support lines lighter than others?

The indicator uses transparency to represent different RSI periods. Level 1 (shorter period) is more opaque, while higher levels (longer periods) are more transparent to help you distinguish between short-term and long-term price levels.

Does this indicator provide buy or sell signals?

No, the indicator is a visual aid designed to highlight price action patterns, volume spikes, and supply/demand levels. Interpretation and trade execution are the responsibility of the user.