Liquidity Levels

The Peak Activity Levels indicator is a powerful tool that helps traders identify significant support and resistance levels formed by prices accompanied by high volume. This indicator not only highlights these key levels but also provides a histogram that tracks the frequency of closing prices falling within these levels, depicting the number of bullish candles.

Understanding the Peak Activity Levels Indicator

Indicator Settings

• Length: This parameter sets the lookback period required to detect peaks in volume, allowing traders to focus on recent price actions.
• Number Of Levels: Determines how many support and resistance levels you want to display on the chart, enabling customization based on trading strategies.
• Levels Color Mode: Gives you the flexibility to choose how the levels are colored:
  • Relative: Colors levels based on their relative position to the current price.
  • Random: Assigns random colors to each level, offering a visually diverse representation.
  • Fixed: Uses a single color for all levels, promoting consistency and simplicity.
• Levels Style: Modify the appearance of the levels by opting for styles like solid, dashed, or dotted, enhancing visual clarity.

Histogram Configuration

• Show Histogram: Toggle this setting to display or hide the histogram, based on your analytical needs.
• Histogram Window: Defines the lookback window for the histogram calculations, indicating the period under analysis.
• Bins Colors: Customize the colors of the histogram bins to distinguish between bullish and bearish trends effectively.

How to Trade with the Peak Activity Levels Indicator?

This indicator is designed to automatically identify and display usable support and resistance levels derived from volume peaks. When a volume peak is detected, it marks the corresponding price as a potential level of support or resistance.

If historical data shows that these levels have been tested before, they could potentially act as significant zones of support or resistance in the future. Traders may conduct further volume analysis to validate potential bounces from these levels.

The accompanying histogram offers insightful data by illustrating whether prices stayed within two levels for extended periods and details the predominance of bullish or bearish candles.

In the above chart example, over a recent 200-bar period (as specified by the Histogram Window setting), 68 closing prices were identified between levels A and B, with 27 bars being bullish. The width and height of each histogram bin provide additional insights into volatility. If you notice a wide yet short bin, it may signify rapid movement with few closing prices within those levels, hinting at increased volatility over a short duration.

FAQ

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

What is the importance of the histogram in this indicator? The histogram helps traders understand the frequency and character of price movements within specified levels, offering insights into the presence of bullish or bearish momentum and market volatility.

Can the color of the levels and histogram bins be customized? Yes, this indicator offers various customization options for coloring both the levels and bins, allowing flexibility to fit different charting styles and enhance visual analysis.