Pocket Pivot Breakout

The Pocket Pivot Breakout indicator identifies high-momentum price surges by combining specific percentage-based price expansion with relative volume strength based on the 'Pocket Pivot' methodology.

Usage

The Usage section focuses on identifying high-conviction entry points during bullish trends.

• Initial Entry: Users can utilize the green triangle signals as confirmation when a stock is breaking out of a consolidated base, such as a Cup and Handle or Darvas Box.
• Pyramiding: For existing positions, the signals act as a continuation indicator to add to a position following a secondary breakout from a tight range.
• Gap-up Detection: By enabling the "Gap-up Bar" setting, users can highlight candles that gap up by more than a specified percentage (default 0.5%). This identifies immediate buying pressure and institutional interest.
• Trend Filtering: It is recommended to avoid signals if the price is significantly extended from the 10-period moving average or if the asset is trading below the 200-period moving average.

Details

The script is built on the 'Pocket Pivot' concept developed by Gil Morales and Chris Kacher. It requires two specific conditions to be met simultaneously:

1. Price Action: The candle's percentage change from open must be greater than the user-defined threshold (default 3%).
2. Relative Volume: The current session's volume must be higher than the highest "down" (red) volume recorded during a specific lookback period (default 10 days).

This logic ensures that the breakout is supported by stronger demand than any selling pressure seen in the immediate past, reducing the likelihood of false breakouts.

Settings

Pocket Pivot Settings

• % change: Sets the minimum price expansion percentage required from the open to the close of the candle.
• Pocket Pivot Lookback Days: Determines the historical window used to compare the current volume against previous red volume bars.

Gap-up Settings

• Gap-up Bar: Toggles the bar coloring feature for sessions that open significantly higher than the previous close.
• Gap-up Value in %: Defines the minimum percentage gap required to trigger the gap-up highlight.

FAQ

How do I use the Pocket Pivot signals?

The signals are best used when a stock is emerging from a constructive price base or consolidation area. They signify that institutional demand is entering the market.

What does a Gap-up indicate?

A Gap-up indicates a sudden surge in sentiment. When a stock gaps up and closes strongly, it signifies strength; however, it should be used in conjunction with base breakouts rather than in isolation.

How do I get access to Pocket Pivot Breakout?

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