Support and Resistance

The Support and Resistance indicator automatically identifies and plots dynamic supply and demand zones on the chart by analyzing price consolidation followed by significant expansion.

Usage

The indicator displays green boxes representing support zones and red boxes representing resistance zones. Traders can use these zones to identify potential reversal points or breakout opportunities.

• Support Zones: Look for buying opportunities when the price enters a green zone. If the price closes below the zone, it may indicate a breakdown.
• Resistance Zones: Look for selling or shorting opportunities when the price enters a red zone. A closure above this zone typically suggests a bullish breakout.
• Zone Behavior: Zones extend to the right until they are mitigated or "broken" by price action. Once a zone is breached, the indicator can highlight the transition of that level (e.g., resistance becoming support).

Details

The script identifies zones by detecting periods where price moves horizontally followed by an impulsive "big candle" exit. It calculates these zones by comparing current candle volatility and body size against previous price action over a specific time window. The logic includes two tiers of detection (Support/Resistance 1 and 2) to capture different scales of consolidation and expansion. This method ensures that the zones plotted are based on actual market momentum rather than simple historical highs or lows.

Settings

• Previous Supports And Resistances: Determines the lookback offset to display historical zones. Increasing this value allows you to view older levels that have since been superseded.
• Previous Supports And Resistances Length: Defines the horizontal length (in bars) for drawing historical boxes when the offset is active.
• Support Color: Customizes the color and transparency of the support (demand) zones.
• Resistance Color: Customizes the color and transparency of the resistance (supply) zones.

FAQ

How do I use the Support and Resistance indicator?

You can use it to identify key price levels where the market has previously shown significant buying or selling pressure.

What do the different colors mean?

Green zones represent areas of support where buying pressure is expected, while red zones represent resistance where selling pressure is likely.

Where 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.