Absorbing System Support and Resistance

The Absorbing System Support and Resistance indicator identifies key market levels by analyzing pivot points and the relative strength of candlestick wicks. This tool aims to provide a clear perspective on supply and demand zones by highlighting areas where price action shows significant absorption.

Usage

The indicator can be used to identify potential reversal zones or breakout opportunities. It draws horizontal lines or boxes at identified support and resistance levels.

• Resistance Identification: A resistance level is formed when a pivot high occurs and the upper wick (sell pin) is longer than the lower wick (buy pin) and the candle body.
• Support Identification: A support level is formed when a pivot low occurs and the lower wick (buy pin) is longer than the upper wick (sell pin) and the candle body.
• Breakdowns: When price crosses these levels, the indicator can highlight the "Breakdown" with a label, signifying a potential shift in market structure.
• Visual Modes: Users can toggle between simple lines or box-style zones that encompass the wick-to-body area of the pivot candle.

Details

The script utilizes a functional approach to identify pivots and evaluate candle anatomy. It calculates the length of the wicks relative to the body to determine if a level is significant enough to be plotted.

The "Absorption" logic is based on the premise that a long wick indicates price was rejected from a level, but the presence of that rejection creates a historical level of interest. The script maintains an internal array of the most recent levels and tracks them until they are "broken" by price action, at which point they are removed from the active tracking list.

Settings

• PivotLEN: Sets the lookback and lookahead period for detecting pivot highs and lows (Range: 5-10).
• Show Breakdown: Enables or disables the visual labels ("BREAKDOWN") when a level is breached.
• Sensitive Breakdown: Determines the logic for a breakdown. If enabled, the high/low of the candle is used; if disabled, the candle body (open/close) is used to trigger the break.
• BOX ?: If enabled, the indicator draws a shaded box between the pivot high/low and the candle body. If disabled, it draws a single horizontal line at the pivot price.

FAQ

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

What causes a level to disappear? A level is removed from the chart once price action "breaks" through it based on the sensitivity settings, or when it is displaced by newer, more recent pivot levels.

Can I use this for automated alerts? Yes, the script includes built-in alert functionality that triggers a notification whenever a resistance or support breakdown is detected.