Trend Levels

The Trend Levels indicator identifies key market boundaries (High, Mid, and Low) during established trends to provide traders with a clear framework for momentum and reversals.

Usage

The Trend Levels tool is primarily used to identify trend phases and potential reaction zones.

• Trend Shift Signals: The script identifies trend changes based on the lookback period. A new uptrend is signaled when a new high is formed within the user-defined length, while a new downtrend is signaled when a new low is formed. These shifts are marked with arrow labels on the chart.
• Trend Level Interpretation: Once a trend is active, the script plots color-coded boundaries. The upper line represents the high of the current trend, and the lower line represents the low. These act as dynamic support and resistance levels.
• Midline Interactions: The mid-level serves as a pivot for the current trend. Retests of this line often indicate pullbacks or trend continuation opportunities. Price action consistently holding above or below the midline confirms the prevailing bias.
• Trend Strength: The indicator calculates trend strength by comparing the number of candles closing above versus below the midline. This delta is visualized through gradient candle coloring and a dashboard display, indicating whether momentum is strengthening or exhausting.

Details

The script operates by tracking the absolute highest and lowest price points since the last trend reversal. A trend reversal is triggered when the price manages to print a new high or low relative to the "Length" input lookback. Upon a trend shift, the internal counters for candle positioning (above/below midline) reset, ensuring that the strength delta reflects only the current market phase. The mid-level is calculated as the arithmetic mean of the trend's high and low.

Settings

• Length: Determines the lookback period used to identify new highs or lows for trend initiation.
• Up Color: Sets the color for the upper trend boundary and bullish signals.
• Down Color: Sets the color for the lower trend boundary and bearish signals.
• Mid Color: Sets the color for the midline pivot.

FAQ

How do I interpret the candle colors? The candle colors are determined by a gradient based on the trend strength. Brighter green colors indicate a higher percentage of closes above the midline (strong bullish momentum), while brighter red colors indicate a higher percentage of closes below the midline (strong bearish momentum).

What do the arrow labels signify? The "⇗" and "⇘" arrows represent a trend shift. These appear when the price breaks the lookback period's high or low, signaling a transition into a new trend structure.

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