Ichimoku A/D Breakout

The Ichimoku A/D Breakout indicator combines Ichimoku Cloud trend filtering with accumulation and distribution price action patterns to identify high-probability breakout opportunities.

Usage

The Ichimoku A/D Breakout tool is used to identify trend-aligned entries based on localized support and resistance breaches.

• Trend Identification: The script uses the Ichimoku Cloud (Span A, Span B, Conversion, and Base lines) to establish the primary trend direction. Bullish signals are only considered when price is above the cloud and the trend is positive, while bearish signals require price to be below the cloud in a negative trend.
• Accumulation/Distribution Signals: Small triangle shapes on the chart indicate specific price action patterns. "Accumulation" (green triangle) suggests buying pressure, while "Distribution" (red triangle) suggests selling pressure.
• Breakout Confirmation: The script tracks the highest distribution level during a bullish trend and the lowest accumulation level during a bearish trend. A breakout is signaled (highlighted by a background color change) when price successfully breaches these key levels.

Details

This script adapts the concept of trend-based breakout trading by replacing standard volatility filters like Supertrend with the Ichimoku Kinko Hyo system. It identifies two specific types of reversals:

1. 1-Candle Wick Reversal: Based on the ratio of the candle body to the total range and the length of the wick, identifying potential exhaustion.
2. 2-Candle Reversal: A more complex pattern looking at the relationship between two consecutive candles to determine a shift in momentum.

The indicator then plots key resistance (red crosses) in bullish trends and key support (green crosses) in bearish trends. The final signal occurs when price closes beyond these dynamic levels, ensuring the breakout has sufficient momentum.

Settings

• Conversion Line Period: Sets the lookback for the Ichimoku Conversion Line (Tenkan-sen).
• Base Line Period: Sets the lookback for the Ichimoku Base Line (Kijun-sen).
• Span B Period: Sets the lookback for the Senkou Span B.
• Displacement: Determines the forward/backward shifting of the cloud components.
• Wait for candle confirm?: If enabled, the breakout signal will only trigger once the candle has closed beyond the level.
• Candle Wick Min Percent: The minimum percentage of the candle range that must be a wick for a reversal signal.
• Candle Body Max Percent: The maximum percentage of the candle range allowed for the body to qualify as a reversal pattern.

FAQ

How do I use the Ichimoku A/D Breakout signals?

Look for background highlights which indicate a confirmed breach of localized resistance or support while the overall trend (defined by the Ichimoku Cloud) is in your favor.

What do the crosses on the chart represent?

The crosses represent the "Key Support" and "Key Resistance" levels derived from previous accumulation and distribution zones. A breakout above/below these marks the trade signal.

How can I access the Ichimoku A/D Breakout?

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