Support Resistance

The Support Resistance indicator is an automated analysis tool designed to identify and visualize key market reaction zones based on swing highs and lows, providing traders with a structured view of price support and resistance.

Usage

The Support Resistance indicator can be used to identify areas where the price is likely to pause or reverse. Unlike traditional horizontal lines, this tool generates dynamic zones that represent a range of price activity, offering a more realistic view of market structure.

• Support Zones: Displayed in green (default), these zones indicate areas where buying pressure has historically emerged.
• Resistance Zones: Displayed in red (default), these zones indicate areas where selling pressure has historically emerged.
• Reversal Signals: Small circles appear on the chart when price enters a zone, highlighting potential touchpoints for trade consideration.
• Smoothing: The indicator applies a smoothing process to the pivot levels, reducing market noise and creating more fluid zones that follow price action more naturally.

Details

The script functions by detecting pivot points (swing highs and lows) over a defined lookback period. Once a pivot is confirmed, the level is stored and processed through a Simple Moving Average (SMA) to create a "smoothed" level. This helps in maintaining a clean chart appearance while keeping the levels relevant to recent price action.

The "zones" are created by calculating a percentage-based offset above and below these smoothed levels. This approach acknowledges that support and resistance are rarely exact prices but rather ranges where liquidity is clustered. The indicator also includes logic to detect when the current high or low interacts with these calculated ranges, triggering visual shapes and alerts.

Settings

• Swing Detection Left Bars: The number of bars to the left required to confirm a pivot point.
• Swing Detection Right Bars: The number of bars to the right required to confirm a pivot point.
• Zone Width (%): Adjusts the vertical thickness of the support and resistance zones based on a percentage of the price.
• Smoothing Length: Determines the period for the SMA applied to the pivot levels to reduce volatility in the lines.
• Support Color: Sets the color for the support lines and zones.
• Resistance Color: Sets the color for the resistance lines and zones.
• Line Width: Controls the thickness of the primary support and resistance lines.

FAQ

How do I interpret the zones? The zones represent areas where price has historically reacted. A touch of the support zone may indicate a potential long opportunity, while a touch of the resistance zone may indicate a potential short opportunity, especially when confirmed by other price action signals.

Can I adjust the sensitivity of the detections? Yes, by modifying the "Swing Detection" bars and the "Smoothing Length" settings, you can make the indicator more responsive to short-term fluctuations or more focused on long-term structural levels.

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