Pivot Points

The Pivot Points indicator highlights specific price levels where market sentiment shifts, identifying potential reversal or continuation zones based on candle color changes.

Usage

The tool is designed to identify "peaks" or "valleys" in price action by monitoring for consecutive candles of opposite colors.

• Trend Continuation: In an uptrend, a pivot point formed by a green candle followed by a red candle can act as a resistance level. A break above this level suggests trend continuation. Conversely, in a downtrend, a break below a pivot point formed by a red candle followed by a green candle suggests further downside.
• Reversal Patterns: These pivot points help visualize classic chart formations like double tops, double bottoms, and head and shoulders patterns.
• Visual Setup: Users can apply the indicator to both a candlestick chart and a line chart simultaneously. While candlesticks provide detail, the line chart helps filter noise to see the market structure more clearly.

Details

The script functions by identifying two specific price action conditions:

1. Bullish Pivot (Sell Line): Occurs when a red candle (close < open) is immediately followed by a green candle (close > open). The closing price of the red candle is used as the pivot level.
2. Bearish Pivot (Buy Line): Occurs when a green candle (close > open) is immediately followed by a red candle (close < open). The closing price of the green candle is used as the pivot level.

The indicator draws horizontal lines from these points. These lines extend until price crosses over them, providing a visual representation of historical support and resistance levels that have yet to be "cleared" by the current price action.

Settings

• Number of candles to draw lines on: Determines the lookback period (in bars) for calculating and displaying pivot levels.
• Draw Buy Line: Toggles the visibility of bearish pivot levels.
• Buy Line Color/Style/Width: Customizes the visual appearance of the resistance lines.
• Draw Sell Line: Toggles the visibility of bullish pivot levels.
• Sell Line Color/Style/Width: Customizes the visual appearance of the support lines.

FAQ

How do I use the Pivot Points indicator? You can use it to identify market structure and key levels where price is likely to react. It is best used in conjunction with other tools like a 20-period SMA or the RSI to confirm trends and momentum.

Does this indicator work on all timeframes? Yes, the logic is based on individual candle relationships and is applicable to any timeframe from 1-minute to monthly charts.

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