Critical Levels Mixing Price Action, Volatility and Volume

The Critical Levels Mixing Price Action, Volatility and Volume indicator is an automated support and resistance tool that identifies high-interest price zones by filtering market activity through structural, volume, and volatility constraints. It aims to highlight areas where significant market participants have stepped in, providing horizontal levels for potential price reactions or trend reversals.

Usage

The script identifies "Critical Levels" when specific price action, volume, and volatility conditions align. When a trigger candle is detected, the indicator draws a horizontal box extending to the right, based on the longest tail of that candle.

• Trade Confirmation: These levels act as areas of interest. Users often look for price reactions when the market returns to these zones. For example, a bearish candle touching a lower level might prompt a buy order above the candle's high.
• Confluence: It is recommended to use these levels alongside other tools like moving averages or oscillators to identify divergences at the levels for higher probability setups.
• Entry Strategy: A common method is placing pending orders (Buy Stop/Sell Stop) above or below the candles that interact with the established levels.

Details

The indicator relies on three distinct algorithms to validate a level:

• Price Action: Analyzes the relationship between the candle body and its tails. It ensures the candle has a specific "core" size and that at least one tail is significantly longer than the other, representing a rejection or strong move.
• Volume: Requires the candle's volume to be higher than an Exponential Moving Average (EMA) of volume, ensuring the level is backed by market activity.
• Volatility: Uses the True Range (TR) compared to the Average True Range (ATR). A signal is only valid if the current candle's volatility exceeds a defined percentage of the historical average.

Settings

Time & Alerts

• Analyze all: When enabled, the script calculates levels across the entire chart history.
• Minutes: Defines the lookback period in minutes for level calculation if "Analyze all" is disabled.
• Alert for new: Enables alerts when a new critical level is identified.

Price Action

• Max Core size %: The maximum allowed percentage of the candle body relative to the total candle range.
• Min Core size %: The minimum allowed percentage of the candle body relative to the total candle range.
• Maximum length for shorter tail %: Constraints the size of the smaller tail to ensure the candle shows a clear directional bias or rejection.

Volume

• Period MA Volume: The lookback period for the Volume EMA.
• Multiplier MA Volume: A multiplier applied to the Volume EMA to set the threshold for high-volume detection.

Volatility

• ATR Period: The lookback period used for the ATR calculation.
• ATR Percentage %: The threshold of the ATR that the current candle's True Range must exceed.

FAQ

How do I interpret the colored boxes?

The boxes represent the price range of the longest tail of the trigger candle. These are considered zones of support or resistance. A green box typically suggests a bullish rejection/interest zone, while a red box suggests bearish interest.

Can I use this for scalping?

Yes, the indicator can be applied to any timeframe. However, the significance of the levels often increases with higher timeframes as they represent more substantial volume and volatility shifts.

How can I access Critical Levels Mixing Price Action, Volatility and Volume?

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