Dynamic Support and Resistance

The Dynamic Support and Resistance indicator identifies key price levels by combining pivot point detection with volatility-based adjustments to create reactive zones on the chart.

Usage

The tool can be used to identify areas of price interest where reversals or continuations are likely to occur. By visualizing these levels as zones rather than thin lines, traders can better account for market "noise" and volatility.

• Trend Identification: Support and resistance levels act as benchmarks for the current trend. A series of rising support zones often indicates an uptrend, while falling resistance zones suggest a downtrend.
• Breakout Confirmation: When price successfully closes beyond a zone, the indicator highlights it as a "Broken Zone." This change in color serves as a visual confirmation for potential breakout strategies.
• Entry/Exit Areas: Users can look for long entries near support zones or short entries near resistance zones, using the far edge of the zone as a reference for stop-loss placement.

Details

The indicator identifies pivot highs and lows within a specified lookback period. Once a pivot is confirmed, the script calculates a zone around that level. To ensure the zones are adaptive to current market conditions, the width of the boxes is determined by the Average True Range (ATR).

When a zone is breached by price (specifically when the high, low, and close all move past the zone boundary), the indicator classifies it as "broken." These historical breaks are retained on the chart up to a user-defined limit to provide context for recent market shifts.

Settings

Main

• Range Candle Count: The number of bars analyzed to determine the significance of pivot highs and lows. Larger values produce more significant, longer-term levels.
• ATR Period: The lookback period for the ATR calculation used to determine zone volatility.
• Box Width Multiplier: A multiplier applied to the ATR to increase or decrease the vertical thickness of the support and resistance zones.
• Max Broken Zones to Display: Limits the number of historically broken zones visible on the chart to maintain visual clarity.

Style

• Support/Resistance Box Color: Customizes the colors for active support and resistance zones.
• Broken Color: Customizes the colors used once a zone has been breached by price.

FAQ

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

What does a broken zone signify? A broken zone signifies that price has successfully moved through a previous area of supply or demand, often indicating a shift in market sentiment or the start of a new trend.

Why do the zones change in thickness? The zones use the ATR (Average True Range) to determine their width. In high-volatility environments, the zones expand to account for larger price swings, while in low-volatility environments, they contract.