Resistances and supports based on simplified Volume Profile

The Resistances and supports based on simplified Volume Profile indicator identifies key supply and demand zones by analyzing volume concentration across price levels over a specific lookback period. It streamlines technical analysis by automatically highlighting major volume peaks, allowing traders to visualize potential reversal points without manual profile calculations.

Usage

The Usage section describes how the script can be used to identify market structure and potential entry/exit zones.

• Support & Resistance Identification: The indicator automatically plots horizontal levels based on volume distribution. A resistance is identified by stepping up from the current price until a volume level higher than the previous one is found. Supports are identified by stepping down until a similar high-volume level is detected.
• Volume Profile Visualization: The tool displays a simplified Volume Profile on the right side of the chart, representing volume distribution over the last 100 bars (default). This helps in identifying the Point of Control (POC) where the most trading activity has occurred.
• Trend Analysis: In a trending market, such as BTCUSDT on a 4-hour timeframe, traders can use these volume-based levels to set take-profit targets at major resistances or place stop-losses below significant volume supports.

Details

The script calculates volume distribution by gathering data from a defined lookback period (Recent Profile Block). Instead of sticking to arbitrary price increments, the indicator modifies the level price to match where the highest volume concentration actually occurs within a specific range, providing a more "weighted" and accurate representation of market interest.

The logic for determining supports and resistances is designed to filter out market noise. By only highlighting levels where volume significantly increases compared to adjacent levels, the script ignores minor price fluctuations that do not represent true liquidity clusters.

Settings

General Settings

• Avoid label price overlaps vertically: When enabled, the script adjusts label positions to prevent them from stacking on top of each other.
• Improve label price overlaps horizontally: Adjusts the horizontal spacing of labels for better readability.
• Use number of bars (not VP timeframe): Allows the user to define the lookback period using a fixed number of bars rather than a specific timeframe.
• Volume Profile width (in bars): Determines the horizontal span of the volume profile histogram on the chart.
• Volume Profile offset (in bars): Controls the distance between the last bar and the start of the volume profile.
• Volume Profile lines width (in pixels): Sets the thickness of the lines used to draw the profile histogram.
• Volume Profile labels size: Changes the text size for price labels (e.g., small, normal, large).
• Volume Profile offset between labels: Controls the horizontal gap between different price labels.
• Show tick difference from current price: Displays the distance between the identified level and the current price in ticks.
• Custom number of bars: Defines the specific number of previous bars used to calculate the volume profile.
• Volume Profile timeframe: Sets the timeframe resolution used for volume data collection.
• Resistances prices number of decimal digits: Adjusts the precision of the price values shown on labels.

FAQ

How do I interpret the different colors on the profile? The indicator uses specific colors to distinguish between the Point of Control (VPOC), current price levels, and detected support/resistance zones for quick visual identification.

Why does the indicator occasionally time out? The calculation depends on the "Bars in recent profile block" setting. If this value is set too high for a specific security or timeframe, the script may exceed the processing limit. Reducing the lookback period will resolve this.

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