Flat Top & Bottom Indicator v2

The Flat Top & Bottom Indicator v2 tool automatically identifies high-precision double tops and double bottoms with structural significance by filtering for exact price matches and path cleanliness.

Usage

The Usage section describes how the script can be used to locate key structural support and resistance levels. This tool is specifically designed for continuous-tick index products like ES (S&P 500 Futures) and MES (Micro S&P), where price frequently resonates at exact tick levels.

• Identifying Resistance (Flat Tops): The indicator draws a red line connecting two equal price peaks. To confirm a reversal, users should look for a strong-bodied bearish candle on the second touch of the resistance level.
• Identifying Support (Flat Bottoms): The indicator draws a green line connecting two equal price troughs. A strong-bodied bullish candle at the second touch provides confirmation of valid underlying support.
• Scalping & Intraday Trading: On a 1-minute chart, the tool identifies intraday structural support. On ultra-small timeframes like the 15-second chart, it can be used to find high-precision entry points for scalping.

Users should avoid trading signals in "Narrow Channels" where price action consists of tiny candle bodies (dojis or spinning tops), as these lack the momentum required for a reliable reversal.

Details

The script utilizes a specific "Path Cleanliness Check" to ensure the reliability of the levels identified:

1. Exact Price Matching: The script requires the left and right price points to be identical.
2. Path Cleanliness: For a Flat Top, no candle high between the two points can exceed the resistance level. For a Flat Bottom, no candle low between the two points can break below the support level. If any wick pierces the level in the intermediate period, the signal is invalidated and the line is not drawn.
3. Phase Extremes: The indicator ensures that the identified points are the highest or lowest within a specific window of neighboring candles to filter out market noise.

Settings

• Lookback Period: (Default 60) Determines how many historical bars the script searches to find a matching price level.
• Pivot Strength: (Default 5) Controls the "sharpness" required for a top or bottom. A value of 5 means the price must be the highest/lowest within the 5 candles before and after it.
• Flat Top Line Color: Sets the color for resistance lines (default red).
• Flat Bottom Line Color: Sets the color for support lines (default green).
• Early Bird Mode: If enabled (TRUE), the script plots lines and labels mid-bar as soon as conditions are met. If disabled (FALSE), it waits for the bar to close for confirmation.

FAQ

How does the Path Cleanliness Check work? The check ensures that the price has not "broken" the level between the two matching points. If any price action exceeds a flat top or drops below a flat bottom during the lookback period, the level is considered violated and will not be displayed.

Which instruments are best suited for this indicator? While it can be used on any asset, it is optimized for highly precise, continuous-tick instruments such as S&P 500 Futures (ES/MES) where exact price level resonance is common.

How can I access the Flat Top & Bottom Indicator v2? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.