Confirmed Fibonacci with Market Structure

The Confirmed Fibonacci with Market Structure indicator provides a high-probability retracement tool that identifies trend-continuation setups only after market structure has been confirmed. It automates the detection of structural breaks, applies volatility filters to ensure impulse quality, and locks Fibonacci levels in place to maintain consistent trade planning.

Usage

The Usage section describes how the script can be used to identify high-interest pullback zones in trending markets.

Identifying Setups

The tool is designed for continuation trading. When price breaks a prior swing high (Bullish) or low (Bearish) with sufficient momentum, the script identifies this as a "Break of Structure" (BOS). It then draws Fibonacci levels from the origin of the move to the impulse extreme. The "Golden Zone" (0.618–0.786) is highlighted as a primary area of interest for entries.

Confirmation Modes

• Fast Draw: When enabled, the indicator identifies the impulse extreme and draws levels as soon as the price confirms a structural break and meets displacement requirements. This is the earliest possible entry signal.
• Pullback Pivot: When Fast Draw is disabled, the script waits for a minor reversal (pullback pivot) before drawing the levels, providing a more conservative confirmation that a retracement is actively underway.

Strategic Application

• Trend Alignment: Use the Higher-Timeframe (HTF) bias filter to ensure you are only taking pullbacks that align with the broader market direction.
• Risk Management: The origin of the leg (the 1.0 level) serves as a natural invalidation point. If price closes beyond this level, the setup is cleared.
• Displacement Filter: Adjust the ATR multiple to filter out "choppy" breaks, ensuring the tool only highlights decisive, high-momentum moves.

Details

The script executes logic based on four primary pillars:

1. Structural Pivot Detection: It uses a user-defined window to identify significant highs and lows rather than minor price fluctuations.
2. BOS Logic: For a bullish leg, the script requires price to trade above the most recent swing high formed before the current swing low. This ensures the move has successfully shifted market structure.
3. Volatility-Adjusted Displacement: By measuring the impulse against the Average True Range (ATR), the script ensures the move is significant relative to current market volatility, preventing entries on weak or exhausted moves.
4. Static Anchoring: Unlike standard Fibonacci tools that may shift as price moves, this script "locks" the anchors once the conditions are met. This prevents the "repainting" of levels and ensures the trade zone remains fixed until invalidation.

Settings

Structure

• Fast Draw: Toggles between immediate drawing upon BOS confirmation or waiting for a pullback pivot.
• Pivot length: Sets the lookback/lookahead period for identifying structural highs and lows.
• Impulse pivot R: Determines the right-side confirmation bars for the impulse extreme (used in Fast Draw).
• Pullback pivot length: Sets the confirmation bars required for the pullback pivot (used when Fast Draw is off).
• Min displacement (ATR): Sets the minimum size of the move relative to volatility required to trigger a setup.
• Invalidation buffer (ATR): Adds a small buffer to the origin point to prevent premature invalidation by price wicks.
• Max leg age (bars): Automatically clears the leg if no new structure is formed within a certain timeframe.

HTF Bias

• Use HTF bias filter: Filters out signals that do not align with the market structure of the next higher timeframe.
• HTF pivot length: Adjusts the sensitivity of structural detection on the higher timeframe.

Fib Levels

• Level Toggles (0.000 - 1.000): Enables or disables standard Fibonacci retracement levels.
• Custom level: Allows the user to input a specific ratio (e.g., 0.705 or 0.886) to be displayed on the chart.

Visual

• Color Theme: Sets the overall aesthetic for the dashboard and lines.
• Price labels: Toggles the display of price values next to the Fibonacci levels.
• Info panel: Enables a dashboard showing current trend state, HTF bias, and setup age.

FAQ

How do I know if a setup is no longer valid? A setup is automatically invalidated and cleared from the chart if price closes beyond the origin level (1.0) plus the ATR buffer, or if the "Max leg age" is reached without a new structural break.

What is the "Golden Zone"? The Golden Zone is the shaded area between the 0.618 and 0.786 Fibonacci levels. This area is historically significant as a zone where price often finds support or resistance before continuing the trend.

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