Support and Resistance

The Support and Resistance indicator identifies and visualizes significant supply and demand zones by clustering historical pivot highs and lows into statistically relevant price areas. Unlike standard horizontal line indicators, this tool creates dynamic zones whose width adapts to market volatility using ATR (Average True Range), providing a more structural view of market context.

Usage

The indicator is used to identify key areas where price is likely to react, consolidate, or reverse. Because zones require a minimum number of pivot touches to appear, the tool filters out minor price fluctuations and focuses on established structural levels.

Users can interpret the zones based on their current color:

• Support (Green): When the current price is trading above the zone, it is treated as a support area.
• Resistance (Red): When the current price is trading below the zone, it is treated as a resistance area.
• Neutral (Blue): When the price is trading directly inside the zone, the color shifts to neutral, indicating a test of that level.

The tool is particularly effective for identifying breakout opportunities or setting targets based on historical price clusters. It includes built-in alert conditions for zone touches and breakouts in both directions.

Details

The script functions by scanning a user-defined historical lookback period to detect pivot points. Each detected pivot is compared against existing clusters. If a pivot falls within a range defined by the current ATR, it is added to a cluster, and the zone boundaries (top and bottom) expand to encompass the new price point.

A zone only becomes visible on the chart once it reaches the "Min Pivot Confirmation" threshold, ensuring that only levels with historical significance are plotted. This clustering method prevents "over-plotting" and reduces the visual noise typically associated with automated support and resistance tools.

Settings

Logic Settings

• Bars to Apply: The number of historical bars the script scans to identify pivots and construct zones.
• Pivot Strength: The number of bars required on both sides of a high or low to confirm a point as a pivot.
• Min Pivot Confirmation: The minimum number of pivots that must align within the same price area before a zone is drawn.

Styling

• Resistance Color: The color assigned to the zone when price is trading below it.
• Support Color: The color assigned to the zone when price is trading above it.
• In-Zone Color: The color assigned to the zone when price is trading within its boundaries.
• Fill Transparency: Controls the opacity of the rectangular price zones.

FAQ

How do I access the Support and Resistance indicator?

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

Why do some zones disappear or change color?

Zones change color dynamically based on whether the current price is above or below them. A zone only remains visible as long as it meets the confirmation criteria and falls within the "Bars to Apply" lookback range.

Can I use this for automated alerts?

Yes, the indicator includes specific alert conditions for "Support or Resistance Broken," "Resistance Broken Upwards," "Support Broken Downwards," and "Zone Touches."