Breakout Trend Follower

The Breakout Trend Follower indicator provides a systematic framework for identifying and participating in upward trends by detecting breakouts above recent swing highs while maintaining a trend-based filter. It aims to capture momentum in trending markets while protecting capital through trailing stop levels based on recent swing lows.

Usage

The tool is primarily used to identify long-entry opportunities when price breaks above a established pivot high. To ensure trades are taken during periods of strength, a Moving Average filter can be applied; signals are only valid when the breakout level is above the selected MA.

• Buy Signals: Triggered when the price exceeds the current "Buy Level" (the most recent pivot high), provided the trend filter conditions are met.
• Sell Signals: Triggered when the price drops below the "Stop Level" (the most recent pivot low), acting as a trend-following exit mechanism.
• Visual Cues: The indicator highlights active trade periods with background coloring and plots the current breakout and stop levels for clear reference.

Details

The script utilizes pivot point calculations (Pivot High/Low) to define dynamic support and resistance levels. A pivot is identified after a specific number of bars have passed without a higher high or lower low, ensuring the levels represent significant local turning points. By requiring the "Buy Level" to be above the filtering Moving Average, the script filters out breakouts that occur in overall bearish or sideways environments.

Settings

• Start Time / End Time: Defines the specific date and time range during which the indicator will generate signals.
• Use MA for Filtering?: Toggles the requirement that signals must occur above the Moving Average.
• MA Type For Filtering: Choose between a Simple Moving Average (SMA) or Exponential Moving Average (EMA).
• MA Period for Filtering: Sets the length of the trend filter MA (e.g., 50 for medium-term trend).
• Color Background for Trades?: Enables or disables background shading during active trade sequences.
• Color Background - Test Period?: Highlights the defined backtesting/analysis time range on the chart.

FAQ

How do I access Breakout Trend Follower?

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

What is the purpose of the Stop Level?

The Stop Level is based on the most recent pivot low. It acts as a trailing exit point that moves up as the market makes new higher lows, helping to lock in profits or minimize losses.

Can I use this for shorting?

This specific version is designed as a long-only trend follower, focusing on breakouts to the upside and exiting when the upward momentum fails.