One-Sided Gaussian Support & Resistance Rate

The One-Sided Gaussian Support & Resistance Rate indicator is a mean reversion oscillator that identifies potential market turning points by filtering price action through a one-sided Gaussian filter. This tool functions similarly to the Fisher Transform, where values leveling out near extreme thresholds (0 or 1) indicate potential zones of support or resistance.

Usage

The indicator can be used to identify overextended market conditions and potential trend reversals. When the oscillator reaches the upper boundary (1.0), it suggests the price is entering a resistance zone, while reaching the lower boundary (0.0) suggests a support zone.

Users can choose between two signal methods:

• Slope: Generates signals based on the direction of the oscillator relative to its previous value.
• Middle Crosses: Generates signals when the oscillator crosses the 0.5 center line, indicating a shift in momentum.

The script also includes optional bar coloring and visual shapes to highlight buy and sell opportunities directly on the chart.

Details

This script implements a one-sided Gaussian filter to smooth price data and determine the relative position of the current price within a lookback period. It uses an Ehlers 2-Pole Super Smoother to pre-process the source inputs (High, Low, and HL2) to reduce lag while maintaining significant noise reduction.

The core calculation involves:

1. Smoothing the High and Low prices using a Gaussian weighted moving average.
2. Determining the highest high and lowest low of these smoothed values over a user-defined Support/Resistance period.
3. Calculating the "Rate" by mapping the current smoothed HL2 price relative to this range, resulting in an oscillator that bounds between 0 and 1.

Settings

Basic Settings

• Gaussian Level Depth: Adjusts the depth/order of the Gaussian filter.
• Extra Smoothing Period: Determines the length for the Ehlers 2-Pole Super Smoother applied to the source inputs.
• Support/Resistance Period: The lookback window used to find the maximum and minimum price boundaries.

Signal Settings

• Signal type: Selection between "Slope" (directional change) or "Middle Crosses" (0.5 level crossing) for signal generation.

UI Options

• Color bars?: Toggles the painting of price bars based on the oscillator's state.
• Show signals?: Toggles the display of "L" and "S" shapes on the chart.

FAQ

How do I use the One-Sided Gaussian Support & Resistance Rate?

You can use it as a mean reversion tool where values near 0 indicate oversold conditions (support) and values near 1 indicate overbought conditions (resistance), or as a momentum oscillator using the middle cross signals.

What makes the Gaussian filter different from a standard moving average?

A Gaussian filter provides better smoothing with less lag compared to simple moving averages by using a specific bell-curve weighting distribution, which in this script is adapted to a "one-sided" implementation for real-time application.

How can I access this script?

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