Support & Resistance Indicator

The Support & Resistance Indicator tool provides an enhanced visualization of potential supply (resistance) and demand (support) zones by utilizing the historical averages of the MACD oscillator. By combining MACD momentum analysis with recent price action, it identifies areas where trend reversals or breakouts are likely to occur.

Usage

The script is designed to highlight key market areas based on historical momentum extremes. It plots visual boxes on the chart to represent these zones:

• Resistance (Supply) Boxes: These appear when the MACD line crosses above its historical average high. These zones suggest the market may be overextended or entering a breakout phase.
• Support (Demand) Boxes: These appear when the MACD line crosses below its historical average low, indicating potential reversal areas or significant demand.
• Box Persistence: Boxes extend as long as the price remains within the established range. If the price breaks through the zone (a high price crossing above a resistance box or a low price crossing below a support box), the box stops extending and can be color-coded as a "closed" zone.

Traders can use these zones to set price targets, identify stop-loss placements, or wait for price retests within these areas for entry confirmation.

Details

The indicator functions by tracking the pivot highs and pivot lows of the MACD oscillator over a user-defined lookback period. It maintains a running average of these pivot points to establish "Average MACD High" and "Average MACD Low" thresholds.

When the real-time MACD crosses these thresholds, the script captures the recent price highs or lows and projects a box forward. This methodology ensures that the support and resistance levels are not just based on price alone, but are confirmed by significant momentum shifts in the MACD.

Settings

MACD Group

• Fast Length: The period for the short-term moving average used in the MACD calculation.
• Slow Length: The period for the long-term moving average used in the MACD calculation.
• Source: The price data used for the MACD (e.g., Close).
• Signal Smoothing: The smoothing period for the MACD signal line.
• Oscillator MA Type: Choose between SMA or EMA for the main MACD oscillator.
• Signal Line MA Type: Choose between SMA or EMA for the signal line.
• MACD Average Count: The number of historical MACD pivots used to calculate the average high/low thresholds.

Plots

• Resistance (Supply) Box Color: The color for zones created at MACD highs.
• Support (Demand) Box Color: The color for zones created at MACD lows.
• Closed Box Color: The color used for boxes once they have been breached by price.

Table

• Show Table: Toggle the visibility of the on-chart data table.
• Location: Select the corner or side of the chart where the table is displayed.
• Size: Adjust the text size within the table.
• Background Color: Customize the transparency and color of the table background.

FAQ

How do I use the Support & Resistance Indicator?

This indicator is used to identify supply and demand zones based on momentum. When the MACD reaches historical extremes, the indicator draws boxes representing key price levels to watch for reversals or breakouts.

Can I customize the sensitivity?

Yes, by adjusting the Fast/Slow lengths or the "MACD Average Count" setting, you can make the zone detection more or less sensitive to market fluctuations.

How can I access this script?

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