Pivot Point SuperTrend

The Pivot Point SuperTrend tool provides a quantitative framework to evaluate the performance of a SuperTrend logic derived from pivot points rather than standard price data. This indicator aims to identify trend reversals and momentum shifts by calculating dynamic trailing stop-loss levels based on filtered pivot averages and ATR volatility.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. This section also focuses on how main settings affect the indicator interpretation and output.

Users can utilize this script to backtest trend-following strategies. A buy signal is generated when the price closes above the trailing stop-loss line, while a sell signal occurs when the price closes below it. The tool is designed to help traders find the optimal combination of pivot periods and ATR multipliers for specific assets.

Exit Management

The script includes a specific feature for partial profit-taking or risk reduction. By enabling the "Use Center Line to Close Entry for 50%" option, the strategy will automatically close half of an open position if the price interacts unfavorably with the calculated pivot center line. This acts as an early warning system or a take-profit mechanism before the primary trend officially reverses.

Details

The script calculates trend direction by first identifying Pivot Highs and Pivot Lows over a user-defined period. A "Center Line" is derived from these pivots using a weighted moving average approach: $(Center \times 2 + Last Pivot) / 3$.

The SuperTrend bands are then projected from this center line using the Average True Range (ATR) multiplied by a specific factor. Unlike the traditional SuperTrend which uses the median price (HL2), this version anchors its volatility bands to the smoothed pivot data, potentially offering a more stable trend baseline during volatile market conditions.

Settings

• Pivot Point Period: Determines the lookback period used to identify high and low pivot points.
• ATR Factor: The multiplier applied to the ATR to set the distance of the trailing stop-loss from the center line.
• ATR Period: The lookback window for the Average True Range calculation.
• Min profit Rate if Center Line Used: The minimum percentage gain required before the center line exit logic becomes active.
• Use Center Line to Close Entry for 50%: Enables a partial exit strategy when price crosses the pivot center line.
• Show Pivot Points: Toggles the visual labels for the underlying Pivot Highs and Lows.
• Show PP Center Line: Toggles the visibility of the internal pivot-based baseline.
• Enter Only Long Position: Restricts the backtest to long-only signals, ignoring short entries.

FAQ

How do I adjust the sensitivity of the trend signals? You can adjust sensitivity by modifying the ATR Factor and ATR Period; a lower factor makes the script more reactive to price changes, while a higher factor filters out more noise.

What is the purpose of the Center Line? The Center Line represents the average value of recent pivots and serves as the anchor for the SuperTrend bands, as well as a potential early exit trigger.

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