Hoffman A/D Breakout

The Hoffman A/D Breakout indicator identifies potential trend reversal or continuation points by detecting accumulation and distribution wicks during trending markets.

Usage

The Hoffman A/D Breakout tool is designed to catch momentum shifts when price breaks through specific candle wicks that represent buying or selling pressure.

• Bullish Breakout: During an uptrend (Fast EMA > Slow EMA), the script identifies "Distribution" wicks (sizable top wicks). These high points are marked as Key Resistance with green crosses. A breakout above this resistance is highlighted with a green background, signaling a potential long entry.
• Bearish Breakout: During a downtrend (Fast EMA < Slow EMA), the script identifies "Accumulation" wicks (sizable bottom wicks). These low points are marked as Key Support with red crosses. A breakout below this support is highlighted with a red background, signaling a potential short entry.

The indicator includes a "Rocket Fuel" filter using ATR; it avoids entries if the wick is excessively long (greater than 1 ATR), suggesting the move may have already exhausted its momentum.

Details

The script is based on Rob Hoffman's Accumulation/Distribution Breakout strategy. It employs two Moving Averages to determine the trend bias. The core logic relies on the ratio between the wick size and the total candle range. If a wick exceeds a user-defined percentage of the candle body, it is flagged as a significant accumulation or distribution point. The "Key Levels" are updated dynamically: in an uptrend, the resistance level only moves higher, and in a downtrend, the support level only moves lower, ensuring the breakout requires a new local high or low relative to identified wick zones.

Settings

• Candle Wick Min Percent: Sets the minimum percentage of the total candle range that a wick must occupy to be considered a significant accumulation or distribution signal.
• ATR Period: The lookback period for the Average True Range used to filter out wicks that are too large (overextended).
• EMA Fast Period: The length of the fast Exponential Moving Average used to determine trend direction.
• EMA Slow Period: The length of the slow Exponential Moving Average used as the baseline for trend determination.
• Wait for candle confirm?: If enabled, breakout signals (background highlights) will only trigger once the candle has closed beyond the key level.

FAQ

How do I interpret the colored shapes on the wicks?

A green circle on a top wick indicates a Distribution candle, while a red circle on a bottom wick indicates an Accumulation candle. Crosses mark the specific price levels that need to be broken for a valid entry.

Why do some wicks not generate a signal?

The script filters signals based on the trend (EMAs) and the "Rocket Fuel" rule. If the market is sideways or if the wick size exceeds the current ATR, no signal will be generated.

How can I access Hoffman A/D Breakout?

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