Low Volatility Breakout + TP/SL Levels

The Low Volatility Breakout + TP/SL Levels indicator identifies high-probability breakout opportunities following periods of market consolidation by dynamically monitoring candle body sizes and volatility.

Usage

The tool detects periods where price action "tightens," represented by a sequence of small-bodied candles. Once a consolidation phase is identified, the script waits for a decisive breakout candle to signal a potential trade.

• Bullish Signal: A green triangle appears below the bar when a large bullish candle closes above the consolidation range.
• Bearish Signal: A red triangle appears above the bar when a large bearish candle closes below the consolidation range.
• Consolidation Boxes: Visual boxes highlight the accumulation or distribution zones. These stay on the chart until the breakout occurs.
• Risk Management: Upon a signal, the indicator automatically plots three Take Profit (TP) levels and one Stop Loss (SL) level. A live table in the top-right corner displays these exact price levels for immediate execution.

Details

The script uses a dynamic approach rather than fixed support and resistance. It calculates an average candle body size over a lookback window (Volatility Window). A consolidation is confirmed if a minimum number of bars (Min Consolidation Bars) have bodies smaller than a defined multiplier of that average.

The breakout itself must meet strict criteria:

1. The breakout candle must be larger than the average body multiplied by the Breakout Multiplier.
2. It must be the largest candle within the entire preceding consolidation period.
3. The box height must not exceed a specific multiplier of the average candle body, filtering out "volatility traps" or overly wide ranges.

Settings

Consolidation Settings

• Volatility Window: The period used to calculate the average candle body size.
• Consolidation Multiplier: Determines how small a candle body must be relative to the average to count as consolidation.
• Breakout Multiplier: The minimum size required for a candle to trigger a breakout signal.
• Box Height Multiplier: Filters out consolidations that are too wide vertically.
• Min Consolidation Bars: The minimum number of small candles required to form a valid zone.
• Show Consolidation Boxes: Toggles the visibility of the shaded range boxes.

Risk Management Settings

• TP/SL Calculation Mode: Choose between 'Candle Multiplier' (based on Average True Range over a specific period) or 'Percentage' (fixed percentage from the close).
• Average Candle Length Period: The lookback period for the ATR-based calculation mode.
• Multipliers/Percentages: Individual inputs to define the distance for TP1, TP2, TP3, and the SL.

FAQ

How do I use the breakout signals effectively?

It is recommended to trade breakouts in the direction of the higher-timeframe trend. You can also experiment with different reward-to-risk ratios by adjusting the TP/SL multipliers in the settings.

What is the difference between the two TP/SL modes?

The 'Candle Multiplier' mode adapts to current market volatility by using the average candle range, whereas 'Percentage' mode uses a fixed distance from the entry price regardless of volatility.

How do I access this tool?

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