HL/LH Confirmation Strategy (Clean Market Structure)

The HL/LH Confirmation Strategy (Clean Market Structure) indicator tracks the formation of Higher Lows (HL) and Lower Highs (LH) to help traders identify sustainable trend reversals and continuations. By focusing on confirmed pivot points rather than chasing price extremes, it provides a visual mapping of market structure for more informed entry decisions.

Usage

The Usage section focuses on identifying trend strength through confirmed structural shifts. The indicator alternates between looking for a Higher Low and then a Lower High to map the rhythm of the market.

• Bullish Confirmation: An "HL" label appears when a new pivot low is formed that is higher than the previous pivot low. This indicates that buyers are defending higher price levels, suggesting a potential long entry.
• Bearish Confirmation: An "LH" label appears when a new pivot high is formed that is lower than the previous pivot high. This indicates that sellers are preventing higher prices, suggesting a potential short entry.
• Trend Mapping: The tool draws connecting lines between these valid pivot points, allowing traders to see the underlying trend geometry clearly.

Details

This tool utilizes a pivot detection algorithm that requires a specific number of bars to the left and right of a candle to confirm it as a local high or low. Unlike standard fractal indicators that plot every peak and trough, this strategy specifically filters for "Higher Lows" and "Lower Highs." This means if the market makes a "Lower Low" during an uptrend search, it updates the reference point without triggering a signal until a "Higher Low" is eventually established. This logic helps filter out market noise and focuses purely on structural strength.

Settings

Pivot

• Pivot Left: The number of bars required to the left of a candle for it to be considered a pivot point.
• Pivot Right: The number of bars required to the right of a candle to confirm the pivot point (this also determines the signal lag).

Signal color

• HL Background color: The color of the label background for Higher Low signals.
• HL Text color: The color of the "HL" text within the label.
• LH Background color: The color of the label background for Lower High signals.
• LH Text color: The color of the "LH" text within the label.

Line color

• Line color: The color of the path connecting the confirmed HL and LH points.
• Line width: The thickness of the trend lines.

FAQ

How do I use the HL/LH signals for entries?

Traders typically look for HL labels as confirmation to enter long positions in an uptrend and LH labels to enter short positions in a downtrend, as these points signal that the market structure is holding.

Why does the signal appear a few bars late?

The indicator relies on "Pivot Right" confirmation. A signal can only be confirmed once the specified number of bars to the right have closed, ensuring the high or low is a valid structural point.

How can I access this indicator?

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