Support and Resistance

The Support and Resistance indicator identifies key market levels by combining pivot point calculations with volume analysis to highlight significant supply and demand zones.

Usage

The tool is primarily used to visualize historical and active price ceilings (resistance) and floors (support). Traders can use these zones to anticipate potential price reversals or breakouts.

By default, the indicator draws boxes at pivot points that coincide with high-volume spikes. This ensures that the levels shown represent areas where significant market activity occurred. Users can observe how price reacts to these zones; for example, a resistance box might be extended until the price rejects from it or breaks through it, depending on the chosen invalidation settings.

Details

The script functions through three core processes:

• Pivot Detection: It identifies local highs and lows over a specified lookback period (Short, Medium, or Long). Users can choose to calculate these based on the full wick or just the candle bodies.
• Volume Validation: A level is only marked if the volume at the time of the pivot exceeds the average volume by a user-defined multiplier (e.g., 1.5x). This filters out insignificant price turns.
• Dynamic Management: The script manages an array of visual boxes, extending them forward in time until a specific "Invalidate Condition" is met (either a simple touch or a full candle close through the zone).

Settings

Pivot Settings

• Source: Determines whether pivot points are calculated using candle "Wicks" (high/low) or "Bodys" (open/close).
• Pivot Term: Sets the lookback distance for pivots (Short: 5 bars, Medium: 15 bars, Long: 30 bars).

Volume Settings

• Volume Threshold (multiplier): The multiplier applied to the average volume to detect significant volume spikes required for zone creation.

Display Settings

• Extend Until Price Hits: When enabled, zones extend horizontally until price interaction occurs.
• Gray Out Boxes Once Hit: If enabled, invalidated zones turn gray rather than disappearing, providing historical context.
• Max Boxes Displayed: Controls the visual clutter by limiting the number of boxes shown (All, Recent Few, or Recent Several).
• Invalidate Condition: Defines if a zone is broken by a price "Touch" or only when price moves entirely "Through" the level.

Candle Colors

• Neutral: An optional setting to recolor candles to a neutral white/gray scheme for better visual clarity of the support and resistance zones.

FAQ

How do I access the Support and Resistance tool?

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

What is the difference between the Pivot Terms?

Short terms (5 bars) react quickly to local price changes, while Long terms (30 bars) identify more significant, macro-level support and resistance zones.

Why are some boxes grayed out?

Boxes are grayed out once the price has interacted with them according to your "Invalidate Condition," signaling that the level may no longer be active as a primary support or resistance.