Supertrend A/D Breakout

The Supertrend A/D Breakout indicator combines a trend-following Supertrend filter with advanced Accumulation and Distribution (A/D) candlestick patterns to identify high-probability breakout opportunities within a trending market.

Usage

The tool is designed to identify specific price action setups relative to the prevailing trend. It uses a Supertrend calculated based on a Fast EMA to define the market direction.

• Trend Identification: The Supertrend line (green/red) establishes the primary trend direction. Green indicates a bullish bias, while red indicates a bearish bias.
• Accumulation & Distribution Signals: The indicator plots triangle shapes (Green Up for Accumulation, Red Down for Distribution) based on one-candle wick reversals or two-candle reversal patterns.
• Breakout Levels: In a bullish trend, the script tracks key resistance levels formed by distribution signals (marked with red crosses). A bullish breakout occurs when price breaches these resistance levels. Conversely, in a bearish trend, it tracks key support levels formed by accumulation signals (marked with green crosses), triggering a bearish breakout when breached.
• Confirmations: Users can choose between unconfirmed breakouts (price touching the level) or confirmed breakouts (price closing beyond the level) via the settings.

Details

This script is a modification of the Hoffman A/D methodology. It improves upon previous versions by:

1. Trend Filtering: Replacing simple EMA crossovers with a volatility-adjusted Supertrend to ensure more stable trend detection.
2. Pattern Recognition: Implementing refined A/D candlestick logic that evaluates body-to-range and wick-to-range ratios to filter out weak reversal attempts.
3. Dynamic Levels: Automatically tracking the most significant support or resistance levels within the current trend to identify precise breakout triggers.

Settings

• Stop ATR Period: Sets the lookback period for the Average True Range used in the Supertrend and A/D calculations.
• Stop ATR Multiplier: Determines the sensitivity of the Supertrend line.
• EMA Fast Period: The period for the Fast EMA used as the baseline for the Supertrend.
• Wait for candle confirm?: If enabled, alerts and background highlights only trigger when a candle closes beyond the key level.
• Candle Wick Min Percent: The minimum percentage of the total candle range that must be comprised of the wick for a valid reversal signal.
• Candle Body Max Percent: The maximum percentage of the total candle range that the body can occupy for a valid reversal signal.

FAQ

How do I use the Supertrend A/D Breakout for entries?

You can look for bullish breakouts (green background highlights) when the Supertrend is bullish and price breaks above the established red resistance crosses. Bearish breakouts (red background highlights) are sought when the Supertrend is bearish and price breaks below the green support crosses.

Can I adjust the sensitivity of the candlestick patterns?

Yes, you can modify the "Candle Wick Min Percent" and "Candle Body Max Percent" in the settings to make the A/D signal detection more or less strict based on the asset's volatility.

How do I get access to this tool?

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