Price Action - Support & Resistance by DGT

The Price Action - Support & Resistance by DGT indicator identifies key horizontal support and resistance levels based on consecutive price action, volume surges, and volatility expansions. This tool aims to pinpoint significant market barriers and exhaustion points to improve entry and exit precision.

Usage

The Usage section describes how the script can be used to identify market structure and potential reversals. The indicator automatically plots horizontal lines at levels where the market has shown significant reaction or exhaustion.

• Support & Resistance Lines: These are plotted when the script detects at least three consecutive bars of increasing volume or consistent directional movement. Static lines represent historical barriers where price may bounce or break.
• Volume Spikes: Labeled as "Exhaustion Signals," these markers identify unusually high volume relative to the long-term average. These often precede trend reversals or absorption phases.
• Volatility Expansion (ATR): The script highlights impulsive moves where the bar range exceeds a multiplier of the ATR, signaling potential breakout conditions.
• Volume & Sentiment Profile: A histogram on the right side of the chart displays volume distribution across price levels. This helps identify High Volume Nodes (value areas) and Low Volume Nodes (potential supply/demand zones).
• Supply & Demand Zones: Derived from the volume profile, these shaded areas represent zones where significant buying or selling pressure is concentrated.

Details

The script uses a combination of volume analysis and price action logic to determine level significance.

• Calculation Logic: For standard S&R detection, the tool looks for a minimum of three consecutive bars moving in the same direction. If volume increases on each bar and the final bar's volume exceeds the Volume Moving Average (VMA), a level is marked.
• Historical Significance: Lines are not deleted, allowing users to see where historical levels overlap. Overlapping lines suggest a "strong" level more likely to hold, while isolated lines may represent "minor" levels causing temporary pauses.
• Volume-Weighted Bars: The indicator paints bar colors based on the current bar's volume relative to its long-term VMA, providing an immediate visual cue for the strength of a price move.
• Exhaustion Signals: Volume spikes often indicate news-driven events or the climax of a trend. When price breaks a level without a corresponding volume spike, it may be a "false breakout."

Settings

General Settings

• Lookback Range: Choose between "Visible Range" or a "Fixed Range" of bars for calculations.
• Volume Moving Average Length: The baseline period used to compare current volume for S&R detection and spikes.

Consecutive Volume / Price Structure

• S & R Calculation Source: Toggle between "Price" or "Volume" logic to detect directional sequences.
• S & R Lines: Enable or disable the plotting of standard support and resistance lines.

Volume Spike — Exhaustion Signal

• Volume Spike Threshold: Sets the multiplier for the Volume MA to trigger an exhaustion signal.
• Levels (Bullish/Bearish): Choose whether to plot lines at the High, Low, or Close of the spike bar.

High Volatility (ATR Expansion)

• ATR Length & Multiplier: Parameters used to define what constitutes a volatility expansion.

Volume & Sentiment Profile

• Volume & Sentiment Profile: Toggle the visibility of the profile histogram.
• Supply & Demand Zones: Enables shaded boxes based on profile structure.
• Point of Control (POC): Options to show the Developing POC or the final POC line.
• Value Area (%): Defines the percentage of volume (typically 68%) used to calculate the Value Area High (VAH) and Value Area Low (VAL).

FAQ

How do I identify a strong support or resistance level? The more often a level is "tested" (touched and bounced off) over time, and the higher the volume at that level, the more significance it carries. Overlapping historical lines in the script indicate these high-consequence zones.

What does a volume spike signal? A volume spike often indicates exhaustion or institutional interest. If price reaches a resistance level on a massive volume spike, it may be a sign of a "climax" followed by a reversal rather than a sustainable breakout.

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