Standard deviation zones Support & Resistance

The Standard deviation zones Support & Resistance [LM] indicator is a technical analysis tool that automatically identifies and projects horizontal support and resistance levels based on high and low standard deviation zones across multiple timeframes. This helps traders visualize significant institutional price levels and potential reversal zones with dynamic color-coding based on current price action.

Usage

The indicator identifies specific "zones" where price volatility has reached standard deviation extremes. Once these zones are established, the script plots horizontal lines at the highest and lowest points of that zone. These lines act as dynamic support and resistance:

• Support: When price is above the level, the line typically represents a support zone (often green).
• Resistance: When price is below the level, the line typically represents a resistance zone (often red).

Traders can enable up to two different timeframes simultaneously (e.g., Daily and 4-Hour) to find "confluence" where major levels from different periods overlap. The tool can display up to three historical major levels for each timeframe, providing a comprehensive view of historical price floors and ceilings.

Details

The script utilizes a standard deviation calculation (credited to Zeiierman) to determine the boundaries of volatility zones. It calculates the relative distance between price and its recent extremes, then compares this to a moving average of standard deviations.

A "zone" is initiated when these conditions are met and ends when the volatility reverts. The script then scans the range between the start and end of that specific zone to find the absolute high and low, which become the horizontal levels. Notably, if a zone is currently active (unfinished), the level will trail the current high/low until the zone completes.

Settings

General Settings

• Source: Determines the price data used for the zone calculations (default is OHLC4).

Bottoms & Tops Settings

• Period: The lookback period used to determine the local highs or lows for zone identification.
• Stdev Period: The lookback period for the standard deviation calculation that defines the zone's sensitivity.

Timeframe Settings (First & Second)

• Enable Timeframe: Toggles the visibility of levels for the specific timeframe.
• Timeframe: Sets the resolution for the levels (e.g., D, 240, 60).
• Show Major Levels: Three separate toggles to display the most recent (1st), previous (2nd), or older (3rd) major support and resistance levels detected.

FAQ

How do I access Standard deviation zones Support & Resistance [LM]?

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

Why do the lines sometimes move or trail?

The lines will trail the current high or low if a new volatility zone has started but has not yet finished. Once the zone conditions end, the level becomes fixed at the extreme point of that period.

Can I use this for multi-timeframe analysis?

Yes, the indicator supports two independent timeframe inputs, allowing you to see Daily levels while trading on a 15-minute or 1-hour chart for better context.