Support Resistance Channels

The Support Resistance Channels indicator identifies and visualizes dynamic support and resistance zones by grouping pivot points into weighted channels to highlight key price levels. This tool automates the detection of significant market structures, providing traders with real-time alerts when price enters or breaks through these zones.

Usage

The Usage section describes how the script can be used to identify key market levels. The indicator automatically scans for pivot points and aggregates them into rectangular channels based on their proximity.

• Identifying Zones: Support and resistance levels are displayed as horizontal boxes. The script automatically colors these based on price position: red for resistance (above price), green for support (below price), and blue when price is currently within the channel.
• Trend Confirmation: Traders can use the integrated Moving Averages (MA 1 and MA 2) to determine the overall trend direction in conjunction with the S/R zones.
• Breakout Detection: When "Show Broken Support/Resistance" is enabled, the script plots triangle shapes on the chart to signal when the price has closed outside a previously established zone.
• Strength Filtering: By adjusting the "Minimum Strength" setting, users can filter out minor price fluctuations and focus only on significant areas where multiple pivot points have converged.

Details

The script executes a multi-step process to define and rank S/R channels:

1. Pivot Detection: It identifies pivot highs and lows within a user-defined period.
2. Dynamic Grouping: For every new pivot found, the script searches for other pivots within a specific "Maximum Channel Width." This width is dynamic, calculated as a percentage of the high-low range over the last 300 bars.
3. Strength Calculation: Each channel is assigned a strength score. Points are awarded for every pivot point contained within the channel (20 points per pivot) plus additional points for every time price has interacted with (touched) that range during the loopback period.
4. Sorting and Ranking: The indicator sorts all detected channels by strength and displays only the top-ranked zones (up to 10) to maintain chart clarity.
5. Dynamic Updates: Older channels are cleared and recalculated whenever new pivot points appear, ensuring the levels remain relevant to current price action.

Settings

Settings 🔨

• Pivot Period: Determines the number of bars required on the left and right side of a high/low to be considered a pivot point.
• Source: Choose between "High/Low" or "Close/Open" for calculating pivot levels.
• Maximum Channel Width %: Sets the maximum allowable vertical height for a channel, relative to the 300-bar price range.
• Minimum Strength: Filters channels; a channel must have at least this many pivot points to be displayed.
• Maximum Number of S/R: The maximum number of strongest channels to display on the chart.
• Loopback Period: Defines how far back the script looks to find pivot points and calculate channel strength.

Colors 🟡🟢🟣

• Resistance Color: The color of channels currently above the price.
• Support Color: The color of channels currently below the price.
• Color When Price in Channel: The color used when the current price is trading within a zone.

Extras ⏶⏷

• Show Pivot Points: Displays "H" and "L" labels on the chart where pivots are detected.
• Show Broken Support/Resistance: Enables visual shapes (triangles) when a zone is breached.
• MA 1 / MA 2: Toggle and configure two independent moving averages (SMA or EMA) for trend context.

FAQ

How does the indicator determine which channels are the most important? The indicator ranks channels based on a "Strength" score, which combines the number of pivot points within the zone and the total number of historical price touches (highs or lows) that fall within the channel range.

Why do the colors of the channels change? The colors are dynamic based on the current market price. If the price is above a channel, it turns green (support). If the price is below, it turns red (resistance). If the price is inside the channel, it turns blue to signal a neutral/active zone.

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