Dynamic Support and Resistance Pivot Strategy

The Dynamic Support and Resistance Pivot Strategy indicator provides an automated framework for identifying and trading key market turning points using price pivots to establish evolving support and resistance levels. By detecting local highs and lows, the strategy dynamically adjusts its outlook to accommodate both trending and ranging market conditions, offering a systematic approach to mean reversion and trend continuation.

Usage

The strategy is designed to execute trades based on the interaction between price and calculated pivot levels.

• Long Entry: Triggered when the price is within the specified distance of a support level and performs a crossover from below to above. This suggests that the price floor is holding and upward momentum is resuming.
• Short Entry: Triggered when the price is within the specified distance of a resistance level and performs a crossunder from above to below. This indicates that the ceiling is holding and downward momentum is resuming.
• Exit Logic: The strategy utilizes fixed percentage-based take profit and stop loss orders to manage risk. Additionally, positions are reversed if a valid signal in the opposite direction is detected.

Details

The strategy relies on the ta.pivothigh and ta.pivotlow functions to determine significant structural points. A pivot high is confirmed when a bar's high is higher than the highs of a specified number of bars before and after it. These points are then projected forward as dynamic resistance and support levels.

A unique feature is the Support/Resistance Distance (%) filter. This creates a "buffer zone" around the levels. Instead of requiring an exact touch, the strategy identifies trading opportunities when the price is within a specific percentage proximity to the level, making it more adaptable to volatile price action where levels are often "tested" rather than hit perfectly.

Settings

• Pivot Length: Determines the number of bars required on either side of a high or low to confirm a pivot point.
• Support/Resistance Distance %: Defines the percentage range around a level where a price action is considered "near" the level for entry qualification.
• Stop Loss %: The percentage distance from the entry price used to set the stop loss order.
• Take Profit %: The percentage distance from the entry price used to set the limit order for profit-taking.

FAQ

How do I interpret the chart visuals?

Green lines represent current support levels derived from the latest pivot low, while red lines represent resistance levels from the latest pivot high. Labels appear on the chart to highlight the specific price at which the pivot was formed.

Can I use this for different timeframes?

Yes, the strategy is flexible. For 1-hour charts, a Pivot Length of 2 and a distance of 0.4% is recommended. For 20-minute charts, a Pivot Length of 4 and a distance of 0.1% may be more effective.

How can I access Dynamic Support and Resistance Pivot Strategy?

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