Support and Resistance
Last updated
Last updated
The Support and Resistance (S/R) component in the ILPAC indicator is designed to automatically detect and display key support and resistance zones based on price action. These zones represent areas where buying or selling interest has historically been strong, offering traders valuable insights into potential reversal points, breakout zones, and key decision-making levels in the market.
The component automatically identifies significant price levels where reversals or consolidations have occurred, eliminating the need for manual analysis. By analyzing historical pivot highs and lows, the indicator draws zones that traders can rely on for key price action insights.
Time-Horizon Setting: Traders can adjust the look-back period to control the scope of the analysis. A larger time horizon identifies long-term support and resistance levels, while a shorter time horizon focuses on more recent price activity.
Zone Expiry Age: The component includes an option to automatically remove old zones after a specified number of bars to keep the chart clean and relevant to current market conditions.
The indicator dynamically adjusts zone boundaries when new price action interacts with existing zones, ensuring that support and resistance levels remain accurate and reflective of current market behavior.
Zones expand or shift in response to significant price movements, adapting to the evolving market structure.
Enabling the "Visual Repainting" option ensures that zones are drawn based on the pivot from which they originated.
Disabling this option locks zones at the point they were detected, providing clarity on when a zone first appeared.
Base and Highlight Colors: Customize the visual appearance of zones with separate base and highlight colors for easier differentiation. (Base color, blue by default show new zones while highlight color, orange by default shows when a zone has been tested multiple times, indicating potential significance)
Zones become visually highlighted when they are actively being expanded or updated based on price interactions.
Support and resistance zones mark areas where price has historically reversed or consolidated. Use these levels to:
Identify entry and exit points.
Confirm the validity of other technical signals.
Monitor potential breakout or breakdown areas.
Short-Term Trading: Use a smaller look-back period to focus on intraday levels for scalping or day trading.
Long-Term Trading: Increase the look-back period for swing or position trading, highlighting major support and resistance zones.
Market Structure (MS): Use S/R zones alongside structural breaks (CHoCH or BOS) for higher-confidence trades.
FOMO Bubbles: Watch for FOMO bubbles near S/R zones to confirm potential reversals or continuations.
Trend Lines: Trend line breaks near S/R zones may indicate high-probability trading opportunities.
Enable the "Zone Expiry Age" setting to automatically remove outdated zones, keeping the chart uncluttered and relevant to the current market.
Use S/R zones in conjunction with other technical analysis tools, such as trend lines, indicators, and candlestick patterns, to increase confidence in trading decisions.
When price approaches a resistance zone, watch for bearish patterns or signs of exhaustion to prepare for a potential reversal.
When price nears a support zone, look for bullish patterns or accumulation signals as potential entry points.
Pay attention to highlighted zones, as they indicate active interaction with price. These zones are more likely to trigger significant market responses.
Set the Support & Resistance time horizon to 12 for identifying key intraday levels.
Enable visual repainting to ensure zones reflect their origin points.
Configure the zone expiry age to 1200 bars to keep the chart clean.
If price approaches a strong support zone during a downtrend, look for bullish reversal patterns to enter a long position.
If price breaks below a support zone and retests it, consider it a new resistance zone and look for shorting opportunities.
The Support and Resistance component simplifies the identification of critical price levels, helping traders anticipate market movements and make informed decisions. When combined with other ILPAC features, it provides a powerful toolset for navigating various market conditions.
