Dynamic Support Resistance Strategy @tradingbauhaus

29 ธ.ค. 2024

Dynamic Support Resistance Strategy tradingbauhaus
This script is designed to identify dynamic support and resistance levels on a trading chart based on pivots (highs and lows) detected over a specific period. It also includes a basic strategy logic to generate entry signals when the price breaks these support or resistance levels. Below is a step-by-step explanation of how it works:

How the Script Works:
Pivot Detection:

The script identifies pivots (highs and lows) using the pivothigh and pivotlow functions.

The period for detecting pivots is configurable (Pivot Period).

The source for pivots can be either High/Low (highs and lows) or Close/Open (close and open), depending on user selection.

Creation of Support and Resistance Channels:

The detected pivots are used to create dynamic support and resistance channels.

The maximum channel width is defined as a percentage (Maximum Channel Width %) of the price range over a 300-bar period.

Only channels containing a minimum number of pivots (Minimum Strength) are considered valid.

Visualization of Channels:

Support and resistance channels are plotted on the chart as shaded areas.

Channel colors are customizable:

Resistance: Red.

Support: Blue.

Channel (price inside): Gray.

Optionally, the detected pivots can be displayed on the chart.

Breakout Detection:

The script checks if the price breaks a support or resistance level.

If the price breaks a resistance level, a buy signal is generated.

If the price breaks a support level, a sell signal is generated.

Breakouts are visually marked with triangles (optional) and trigger alerts.

Moving Averages (Optional):

The script allows displaying two moving averages (SMA or EMA) with configurable periods.

These moving averages can be used as additional reference tools for analysis.

Strategy Logic:

When the price breaks a resistance level, the script enters a long position.

When the price breaks a support level, the script enters a short position.

Script Workflow:
Pivot Identification:

The script searches for highs and lows on the chart based on the configurable period.

These pivots are stored in arrays for later use.

Channel Creation:

For each pivot, the script calculates a support/resistance channel, ensuring it meets the maximum width and minimum pivot requirements.

Valid channels are stored and sorted by "strength" (number of included pivots).

Visualization:

Channels are plotted on the chart as shaded areas using the configured colors.

If enabled, pivots are marked on the chart with labels.

Breakout Detection:

The script checks if the price has broken a support or resistance level on the current bar.

If a breakout is detected, a signal is generated and optionally marked on the chart.

Strategy:

If the price breaks a resistance level, a buy signal is triggered.

If the price breaks a support level, a sell signal is triggered.

User Configuration:
The script allows customization of several parameters to adapt it to different trading styles and assets:

Pivot Period: Period for detecting pivots.

Source: Source for pivots (High/Low or Close/Open).

Maximum Channel Width %: Maximum channel width as a percentage of the price range.

Minimum Strength: Minimum number of pivots required to form a channel.

Maximum Number of S/R: Maximum number of channels to display.

Loopback Period: Lookback period for detecting pivots.

Colors: Customization of colors for resistance, support, and channel.

Extras: Options to display pivots, breakouts, and moving averages.

Example Use Case:
Chart Analysis:

On a daily chart, the script identifies key support and resistance levels based on pivots from the last 10 candles.

Channels are plotted as shaded areas, providing a clear visualization of key zones.

Breakout Trading:

If the price breaks a resistance level, the script generates a buy signal.

If the price breaks a support level, the script generates a sell signal.

Moving Averages:

If moving averages are enabled, they can be used as additional confirmation for signals.

Conclusion:
This script is a powerful tool for traders looking to identify dynamic support and resistance levels and capitalize on breakouts as trading signals. Its flexibility and customization make it suitable for a variety of assets and timeframes.