Volume based support resistance with Swing

The Volume based support resistance with Swing indicator identifies key price levels based on high-volume activity and combines them with market structure labels to provide a visual interpretation of trend and pivot areas. By calculating price levels derived from bars with above-average volume, it highlights zones where significant market interest has occurred, serving as potential support or resistance.

Usage

The tool can be used to identify trend direction and potential reversal zones. Users should monitor the horizontal lines generated by high-volume events:

• High Volume Levels: Displayed when volume exceeds the Simple Moving Average (SMA). These represent standard high-activity zones.
• Extreme Volume Levels: Displayed when volume exceeds two standard deviations from the mean. These are significant liquidity areas that often act as strong support or resistance.
• Swing Labels: The indicator automatically identifies market structure using Williams Fractals. Labels such as "HH" (Higher High), "LH" (Lower High), "HL" (Higher Low), and "LL" (Lower Low) appear to help traders confirm if the current trend is bullish or bearish in conjunction with the volume levels.

Details

The script uses the HLC3 price (Average of High, Low, and Close) to determine the price level of a high-volume bar. Volume is compared against a 20-period Simple Moving Average (SMA).

1. High Volume (hvSr): Triggered when the current volume is greater than the SMA.
2. Extreme Volume (evSr): Triggered when volume is greater than the SMA plus two standard deviations. The swing logic is based on a fractal calculation (2 bars back) to identify pivots, providing extra confluence to the volume-based levels.

Settings

• Length: This setting determines the lookback period for the volume SMA and the standard deviation calculation. Adjusting this will change how "sensitive" the indicator is to high-volume spikes.

FAQ

How do I interpret the horizontal lines?

The horizontal lines represent the HLC3 price of bars with significant volume. A standard line indicates above-average volume, while a thicker, colored line indicates extreme volume activity, often marking major institutional interest.

What do the text labels like "hh" and "ll" mean?

These are market structure labels based on swing points. "hh" stands for Higher High, "hl" for Higher Low, "lh" for Lower High, and "ll" for Lower Low. They help identify whether the market is trending or ranging.

How can I access this tool?

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