Breakout Support & Resistance

The Breakout Support & Resistance indicator is a technical analysis tool designed to identify breakout opportunities by detecting price movements through dynamically calculated support and resistance levels. It provides a visual framework for traders by plotting potential entry points, stop-loss (SL), and take-profit (TP) levels based on customizable percentage offsets.

Usage

The indicator can be used to spot trend reversals or continuations when price breaches historical pivot levels.

• Breakout Identification: A bullish breakout is signaled when the price closes above a resistance level, while a bearish breakout occurs when the price closes below a support level.
• Confirmation: To reduce false signals, users can set a number of "Confirmation Bars" that the price must maintain beyond the level before a setup is plotted.
• Trade Management: Once a breakout is confirmed, the script automatically projects entry lines along with two Take Profit levels and one Stop Loss level.
• Filtering: The tool includes a directional filter. A new signal in the opposite direction will only appear if the previous trade hit its targets/stops or if the price moved a specific "Direction Change Threshold" percentage away from the prior entry.
• Multiple Entries: Users can toggle whether to see only the most recent setup or keep up to five recent breakout setups visible on the chart for historical context.

Details

The script utilizes pivot point logic to identify significant highs and lows over a user-defined lookback period. These points are then stored and updated to create horizontal support and resistance zones.

When a price crossover or crossunder is detected, the script initiates a confirmation phase. If the price remains beyond the level for the duration of the confirmation period, the trade levels are calculated relative to the closing price of the breakout bar. The logic also includes internal tracking of trade states to manage directional changes and prevent overlapping or conflicting signal displays.

Settings

• Pivot Lookback Length: The number of bars used to determine the local high (resistance) and low (support) pivot points.
• Breakout Confirmation Bars: The required number of bars price must stay above/below a level to confirm the breakout.
• Take Profit 1 (%): The percentage offset from the entry price for the first target.
• Take Profit 2 (%): The percentage offset from the entry price for the second target.
• Stop Loss (%): The percentage offset from the entry price for the risk level.
• Show Multiple Entries: When enabled, the chart displays up to 5 historical breakout setups instead of just the most recent one.
• Direction Change Threshold (%): The price movement percentage required to override the current trade direction and allow an opposite signal.

FAQ

How do I confirm a breakout with this tool? A breakout is confirmed when price crosses a level and remains there for the number of bars specified in the "Breakout Confirmation Bars" setting.

Can I set alerts for these setups? Yes, the script is optimized for alerts and can notify you when a breakout is detected or when a trade hits its SL or TP levels.

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