The Lux Algo Premium indicator can plot automatic support and resistance levels using 4 different methods. Each method (except volume profile) is dependent on the second drop-down menu (SR Significance), with higher values allowing the indicator to show more significant supports and resistances.
Each method is described below.
The breakout zones provide dynamic supply and demand areas. These can be used to determine regions in the market to place orders. This feature consists of 2 main zones; the irregular cloud and live supply/demand zones. The clouds will appear in real time and provide a zone where the price may find support/resistance. The cloud will appear green when acting as a support and red when acting as a resistance.
The live supply demand zones appear 25 bars after the cloud appears and provide real time areas of supply and demand in the market. A trader may wish to use these levels to identify breakouts of market structures or price action.
The Lux Algo Premium indicator is able to detect specific patterns such as:
- Rising/Falling/Broadening Wedges
- Ascending/Descending and Symmetrical Triangles
- Double Tops/Bottoms
- Head & Shoulders (H&S)
- Inverted Head & Shoulders
When a pattern is detected, it will be displayed on the dashboard. Solid lines will highlight the patterns. When no patterns are detected, dashed lines will be displayed that can be used as support and resistance.
Users can be alerted on the formation of a new pattern by toggling on "Pattern Detection" in the "any alert() function call" settings, and by creating an alert using
any alert() function call as condition.
Note that the pattern detection algorithm depends on the current SR significance selected, higher SR significances aim to return longer-term pattern structures.
Note that the pattern detection algorithm is not perfect and that false positives and false negatives can occur.
The Predictive Ranges are an SR method displaying real-time support and resistance levels, with two resistances (in red), two supports (in blue), and one mid-level (in orange).
When the price deviates significantly from the mid-level a new range is displayed, using lower SR Significance values will return more frequent ranges.
Auto Trendlines display a series of trendlines on the chart, these can highlight points of support or resistance depending on the current price trend.
A higher SR significance allows obtaining the trendlines of longer-term trends. The two trendlines prior to the most recent one are extended and can be used as support/resistances.
A trendline is more significant when it was previously tested.
Note that these trendlines do not appear in real-time and that the most recent trendline can continuously readjust.
The institutional profile is an alternative to the volume profile and indicates the accumulated institutional activity over 100 price ranges over a period of 200 bars. The metric used to generate this profile is inspired by Shalen's hypothesis and extended over a concept we named activity asymmetry.
Make sure the symbol you are applying the indicator to has volume data and contains at least 200 bars.
Reading The Institutional Profile
The institutional profile is calculated over 200 bars and makes use of 100 price ranges.
A gradient is used to color each bar, with lighter colors used for the bars with the highest accumulated institutional activity.
Peak Activity Line
The institutional profile displays an extended dotted line showing the price value was the highest recorded institutional activity.
Note that visual artifices such as lines having a different starting position or multiple lines showing up might occur in very low timeframes for a brief moment.