Distance Oscillator - Support and Resistance

The Distance Oscillator - Support and Resistance indicator identifies potential future support and resistance levels by measuring price deviation from a moving average baseline.

Usage

The tool operates on the principle that significant price deviations from a moving average are often followed by a reversal or corrective movement. By calculating the distance between price and its baseline, the indicator identifies overbought and oversold extremes.

• Support Levels: When the oscillator falls below the lower deviation band (oversold), a support level is drawn at the recent price low. If the oscillator remains in this zone and price makes a new low, the level updates dynamically.
• Resistance Levels: When the oscillator rises above the upper deviation band (overbought), a resistance level is drawn at the recent price high. The level updates if price continues to push higher while the oscillator remains extended.
• Multi-Timeframe (MTF) Analysis: Users can enable HTF levels to see key institutional or macro-level supply and resistance zones plotted directly on their current chart.
• Stats Dashboard: A visual panel provides real-time information on the current oscillator state (Supply, Demand, or Neutral) and the specific percentage deviation for both the current and higher timeframes.

Details

The indicator uses a "Distance Oscillator" which is a centered oscillator similar to RSI but without fixed boundaries. To determine significant exhaustion points, the script applies Bollinger Band-style standard deviation thresholds to the oscillator values rather than the price itself. When the normalized distance between price and its SMA exceeds these calculated standard deviation bands, it triggers the creation of a horizontal support or resistance line.

Settings

Active Levels — Current TF

• Current TF S&R Levels: Toggles the display of support and resistance lines derived from the current timeframe.
• Support/Resistance Color: Customizes the visual appearance of the levels.
• Max Active Levels: Limits the number of lines displayed on the chart to maintain clarity.

Higher Timeframe Context

• HTF S&R Levels: Enables levels calculated from a different timeframe.
• HTF Timeframe: Sets the timeframe (e.g., Daily, Weekly) for macro level detection.

Core Engine — Oscillator

• Price Source: The price input used for calculations (default is Close).
• Baseline Length: The period of the SMA used as the central reference.
• Smooth Length: Applies smoothing to the oscillator to reduce market noise.
• Deviation Length/Multiplier: Controls the sensitivity and lookback period for the overbought/oversold bands.

FAQ

How do I interpret the horizontal lines? The lines represent historical price points where the oscillator reached a statistical extreme. These act as zones of interest where price may find future liquidity or rejection.

Can I use this for multiple timeframes? Yes, the indicator supports Multi-Timeframe (MTF) functionality, allowing you to plot Daily or Weekly levels on a 15-minute or 1-hour chart.

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