Pure Price Action Breakout with 1:5 RR

The Pure Price Action Breakout with 1:5 RR indicator is a systematic trend-following tool designed to identify breakout levels and execute trades based on momentum and market structure.

Usage

The script is primarily used to identify momentum shifts through moving average crossovers confirmed by volume and relative strength. Traders can use the visual signals to enter positions when high-probability breakout conditions are met.

The indicator is optimized for shorter timeframes like the 5-minute and 15-minute charts. When a long signal (green label) appears, the script identifies an entry point with a pre-calculated 1:5 risk-to-reward ratio. Conversely, a short signal (red label) indicates a bearish momentum shift. The tool automatically projects stop-loss and take-profit levels based on market volatility to maintain a strict risk management profile.

Details

The strategy combines several technical components to filter out false breakouts:

• Momentum Filtering: Uses a 9-period EMA and 21-period EMA crossover system to detect the direction of the immediate trend.
• Relative Strength: Integrates the RSI (Relative Strength Index) to ensure momentum is sufficiently strong (above 50 for longs, below 50 for shorts).
• Volume Confirmation: Requires current volume to be above its 20-period simple moving average to validate the breakout's strength.
• Volatility-Based Risk: Employs the Average True Range (ATR) to calculate dynamic stop-loss levels, ensuring that market "noise" doesn't prematurely trigger exits.
• Risk Management: Enforces a fixed 1:5 risk-to-reward ratio, meaning the target profit is five times the distance of the stop-loss from the entry price.

Settings

• Stop-Loss Factor: Adjusts the multiplier applied to the ATR to determine the distance of the stop-loss from the entry price.
• Risk-Reward Ratio: Sets the target profit relative to the risk (defaulted to 5.0).
• Max Trades Per Day: Limits the number of executions within a single trading day to prevent overtrading.
• Default Quantity: Sets the percentage of equity used for each trade position.

FAQ

How do I access Pure Price Action Breakout with 1:5 RR?

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

Which timeframes are best for this indicator?

The script is hard-coded with a timeframe filter optimized for the 5-minute and 15-minute charts to capture intraday momentum.

Does this indicator repaint?

No, the indicator calculates its signals based on the close of the bar and uses standard Pine Script strategy execution logic to ensure signals remain fixed once the candle closes.