Support and Resistance Levels (v.3)

The Support and Resistance Levels (v.3) indicator identifies key market pivot points using momentum-based zigzag logic and provides visual channel lines for trend analysis. By processing smoothed market data and calculating multi-stage momentum, the tool highlights significant highs and lows to assist traders in identifying potential reversal or breakout zones.

Usage

The indicator can be used to visualize structural support and resistance levels through labels and step lines.

• Labels: Green "up" labels appear at local lows, while red "down" labels appear at local highs based on momentum crossovers.
• Channels: When enabled, the script plots step lines connecting these pivot points, helping to visualize current trading ranges.
• Signal Filtering: Users can filter the generated pivots using DMI (Directional Movement Index) or volatility/volume breaks to reduce noise in choppy markets.
• Performance Tracking: The script includes a built-in testing module that displays a dashboard with cumulative return, win rate, and trade count based on a fixed holding period.

Details

The script operates by first smoothing price data using a Double Exponential Moving Average (DEMA). It then calculates the momentum of this average and, subsequently, the "momentum of momentum" (a second derivative approach). Crossovers of this second momentum value against the zero line trigger the identification of new support or resistance levels. This mathematical approach aims to capture shifts in trend velocity before they become apparent in the raw price action.

Settings

Primary Settings

• Lag: Adjusts the lookback period for momentum and pivot calculations.
• Filter DMI?: When enabled, only bullish signals occurring when PDM > MDM (and vice versa) are displayed.
• Show Channel?: Toggles the visibility of the stepline channel connecting support and resistance.
• Filter Signals by: Options to filter pivots based on Volatility, Volume, Both, or None.
• Doji Size: Defines the threshold for identifying Doji candles, marked with an "✖" icon.

Performance Testing

• Performance: Toggles the statistics dashboard on the chart.
• Holding Period: Sets the number of bars a hypothetical trade is held for testing purposes.
• Lot Size: Sets the position size used for cumulative return calculations.
• Use Base Price?: Switches between using the Open price or a (H+L+O)/3 average for trade entry/exit calculations.

FAQ

How do I interpret the labels on the chart?

Green labels indicate identified support levels based on bullish momentum shifts, while red labels indicate resistance levels based on bearish momentum shifts.

Can I use this for automated alerts?

Yes, the script includes built-in alert conditions for both Buy and Sell signals that can be configured through the TradingView Alerts menu.

How can I access Support and Resistance Levels (v.3)?

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