Dynamic Support and Resistance V2

The Dynamic Support and Resistance V2 tool identifies key price levels using both price-based pivots and volume-based data to highlight significant areas of market interest.

Usage

The indicator can be used to identify potential reversal zones, consolidation areas, and trendlines. By default, it plots levels based on pivot points, which are derived from high, low, and close prices.

Traders can utilize this script in several ways:

• Level Validation: Use the line thickness to gauge the importance of a level. Thicker lines indicate levels with more touches and higher traded volume.
• Breakout Trading: Monitor price action around identified resistance and support lines for potential breakouts or rejections.
• Trendline Analysis: Enable the trendline feature to see automated trendlines connecting pivot points, providing a visual of the current market direction.
• Volume Analysis: Toggle on volume-based levels to see the Point of Control (POC), representing the price level with the highest traded volume over a rolling period.

Details

The script operates in two main phases. First, it identifies potential level locations using either price-based pivots or volume-based calculations. Second, it performs an "importance" calculation by counting the number of price touches and the cumulative volume traded near that specific level.

For volume levels, the script calculates a Rolling Point of Control (POC). It divides price action into rows and determines which price bin attracted the most volume over the specified lookback period.

Settings

Support and Resistance

• Show Pivot-Based Levels: Enables levels derived from price pivot points.
• Show Volume-Based Levels: Enables levels based on the Point of Control (POC).
• Number of Lines to Show: Controls the maximum number of support/resistance lines displayed.
• Show touch | volume count: Displays numerical data next to each level regarding its historical significance.
• Bars to the Left / Right: Adjusts the sensitivity of the pivot point detection.
• Quick Right Bars: A shorter lookback for faster pivot confirmation.
• Source for Pivot Levels: Choice between 'Close' or 'High/Low' for pivot calculation.

Rolling POC

• Lookback Period for Rolling POC: Sets the window of bars used to calculate volume-based levels.

Colors

• Use Alternative Colors: Allows for visual distinction between pivot-based and volume-based levels.
• Support / Resistance Colors: Customizes the visual style of the indicator.

Trendlines

• Left Bars / Right Bars: Settings for the automated trendline calculation.
• Show Pivot Points: Displays the underlying pivots used for trendlines.
• Show Old Line as Dashed: Changes the style of historical trendlines once a new one is formed.

FAQ

How do I interpret the thickness of the lines?

Line thickness is determined by a score that combines the number of price touches and the total volume traded at that level. A thicker line suggests a more significant historical level.

Can I use both pivot-based and volume-based levels at once?

Yes, you can enable both in the settings. It is recommended to use "Alternative Colors" when both are active to easily differentiate between price-action pivots and volume-based POC levels.

How can I access Dynamic Support and Resistance V2?

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