alexgrover

Price-Line Channel - A Friendly Support And Resistance Indicator

Introduction

Lines are the most widely used figures in technical analysis , this is due to the linear trends that some securities posses (daily log SP500 for example), support and resistances are also responsible for the uses of lines, basically linear support and resistances are made with the assumption that the line connecting two local maximas or minimas will help the user detect a new local maxima or minima when the price will cross the line.

Technical indicators attempting to output lines have always been a concern in technical analysis , the mostly know certainly being the linear regression , however any linear models would fit in this category. In general those indicators always reevaluate their outputs values (repainting), others non repainting indicators returning lines are sometimes to impractical to set-up. This is what has encouraged me to make a simpler indicator based on the framework used in the recursive bands indicator that i published.

The proposed indicator aim to be extremely flexible and easy to use while returning linear support and resistances, an option that allow readjustment is also introduced, thus allowing for a "smarter" indicator.

The Indicator

The indicator return two extremities, the upper one aim to detect resistance points while the lower one aim to detect support points. The length setting control the steepness of the line, with higher values of length involving a lower slope, this make the indicator less reactive and interact with the price less often.


The name "price-line" comes from the fact that the channel is dependent on its own interaction with the price, therefore a breakout methodology can also be used, where price is up-trending when crossing with the upper extremity and down trending when crossing with the lower one.

Readjusted Option

The line steepness can be readjusted based on the market volatility , it make more sense for the line to be more steep when the market is more volatile, thus making it converge faster toward the price, this of course is done at the cost of some linearity. This is achieved by checking the "readjustment" option. The effects can be shown on BTCUSD , below the indicator without the readjusted option :


when the "readjustment" option is checked we have the following results :


The volatile down movement on BTCUSd make the upper extremity converge faster toward the price, this option can be great for volatile markets.

Conclusion

The recursive bands indicator prove to be an excellent framework that allow for the creation of lots of indicators, the proposed indicator is extremely efficient and provide an easy solution for returning linear support and resistances without much drawbacks, the readjusted option allow the indicator to adapt to the market volatility at the cost of linearity.

The performance of the indicator is relative to the motion of the price, however the indicator show signs of returning accurate support and resistances points. I hope the indicator find its use in the community.

Thanks for reading !

Note

Respect the house rules, always request permission before publishing open source code. This is an original work, requesting permission is the least you can do.


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You can check my indicator papers here : https://figshare.com/authors/Alex_Pierrefeu/7339466
amazing thanks :)
+1 Resposta
alexgrover maxonline
@maxonline, Thanks for your comment :)
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Hi Alex.
When I turn "Readjustment" off, I often (but not always) get "pine cannot determine the referencing length of a series. Try using max_bars_back in the study" and the script does not run.
It seems to me that the problem is related to lines 10 and 11. That is if I understand correctly what is said there:
https://www.tradingview.com/pine-script-docs/en/v4/appendix/Pine_compilation_errors.html#pine-cannot-determine-the-referencing-length-of-a-series-try-using-max-bars-back-in-the-study-or-strategy-function
But I could not find a way out.
Any idea? In advance, thank you.
+1 Resposta
alexgrover VirtualJack
@VirtualJack, I'll work on it, altho i never had this kind of errors at the moment. And i think the problem is not related with a and b but with the conditional statements.
Resposta
This is great! I’d love to see a parabolic version of this.
+1 Resposta
@stluvin, Your wish is my command, stay tuned ;)
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stluvin alexgrover
@alexgrover, Yessss!
+2 Resposta
Super slick my man, very interesting. Can't wait to see what you come up with next.

p.s. to everyone else... respect the man's wishes. don't mess up a good thing.
+3 Resposta
@wroclai, Thanks a lot for the support and for acknowledging my note, my hearth feel warmer :D
+1 Resposta
Thank you Alex. As always, an amazing creation of yours. Very useful. Very effective support and resistance. Yes, I agree with you, this is an excellent framework to create other indicators. Kudos.
+2 Resposta
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