Supertrend Targets

The Supertrend Targets indicator provides a comprehensive trend-following framework that combines the classical Supertrend algorithm with dynamic, volatility-based target levels to identify actionable entry and exit points. By utilizing historical trend reversals and Average True Range (ATR) calculations, the tool projects potential take-profit and stop-loss zones directly on the chart.

Usage

The indicator is primarily used to identify the prevailing market trend and establish realistic price targets based on historical volatility.

• Trend Identification: The main Supertrend line acts as a dynamic support or resistance. A blue line indicates a bullish environment, while an orange line indicates a bearish environment.
• Targeting: The script plots multiple percentile-based levels (25th, 50th, 75th, 90th, and 100th) which represent historical gain and drawdown expectations. These can be used as graduated take-profit or stop-loss zones.
• Entry Points: The "Center Line" serves as a reference point for entering positions when a new trend is confirmed.
• Risk Management: Users can enable a summary table to view numeric data including risk-reward ratios and specific price points for various percentiles, facilitating better trade planning.

Details

The indicator is built upon the Supertrend algorithm, which uses the Average True Range (ATR) multiplied by a factor to determine trend direction. When the price crosses the upper or lower bands, a trend reversal is identified.

Beyond simple trend following, this script incorporates statistical methods to analyze previous trend cycles. It calculates the percentage movement from the entry price of each historical trend to generate target percentiles. Traders can further refine these targets using a scaling factor and window length to focus on recent or long-term market behavior. Additionally, the tool offers advanced smoothing options like Logistic and Sinc kernels for the source price input to filter out market noise.

Settings

General Settings

• Source: Determines the price series used for calculations (e.g., Close, HLCC4, or a smoothed version).
• Show Trailing Stop: Toggles the visibility of the Supertrend trailing stop line.
• Levels: Controls the number of target levels displayed on the chart (range -5 to 5).
• Scale: A factor (1 to 100) used to adjust the magnitude of the target levels.
• Window Length: Defines the lookback period for computing target statistics; setting this to 0 considers all available data.
• Unique: If enabled, ensures only unique data points are used in statistical calculations to avoid bias from identical price movements.

Algorithm Parameters

• Multiplier: The factor applied to the ATR to determine the distance of the Supertrend bands.
• ATR Length: The lookback period used to calculate the Average True Range.

Customization & Display

• Custom Level: Allows the display of a specific statistical level such as Average, Average + STDEV, or a specific Percentile.
• Percent Rank: Sets the specific percentile rank used for the custom target level.
• Enable Table: Toggles a dashboard table on the chart showing detailed risk/reward metrics.
• Position: Adjusts the location of the summary table on the chart.

FAQ

How do I interpret the different target levels?

The levels represent the percentage of historical trends that reached that specific magnitude of gain or drawdown. For example, a 75th percentile gain target suggests that 75% of previous similar trends did not exceed that level, making it a statistically significant area for profit-taking.

Can I use this for any timeframe?

Yes, the indicator is dynamic and adjusts its ATR and percentile calculations based on the timeframe of the chart it is applied to.

How do I access Supertrend Targets?

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