Support & Resistance: While You Draw, Code Lends Me a Hand
⭐ A Technical indicator with code that you may want to save and use ❤
Apologies for the wait since our teaser – life got in the way. 😅 But excited to finally share this with you!
Before we get started, just wanted to remind you to smash that like button and leave a comment below to let me know what you think! 👍💬
Hey mooers🌟!!! Do you know what the support level and resistance level are? Check out this post and the SRL indicator🚗, you will definitely have a deeper understanding of them. Are you ready？ 🚀🚀🚀
Resistance & Support
Let's start with a little story 📖: Imagine you bought a stock at $10. After a while, it rose to $12, giving you a 20% return. Would you sell? 🤔
If it were me, I'd be lost in dreams of it hitting $15 or $20 soon... But alas! 😩 The climb didn't happen, and it dropped to $11. That's when I'd snap out of my fantasy and think, "If it hits $12 again, I'm definitely selling." 🛑✨
Is my thought process unique? I don't think so. I'm just your everyday Joe, and my thoughts are probably what most people are thinking. So, when the stock actually reaches $12 again, all of us would rush to sell, turning this price point into a true resistance level, causing the price to fall once more. 📉
This cycle repeats with investors who hopped in at $11, going through the same emotional journey and making $12 a resistance level yet again. 🔄
After several rounds of this, traders are utterly convinced about the resistance at $12, and this belief further cements the resistance level through a self-fulfilling mechanism. And that's how a resistance level is born! 💡📈
A similar process can create support levels. Can you break it down? 😌
In fact, resistance and support levels are more about the psychology of traders 🧠💹 than the result of fundamental factors. Can we trust such outcomes? Remember, in the market, we're dealing with countless individuals, not some cold, objective stock value. 🌡️📉 As long as there's a consensus that a certain point is a resistance level, then it becomes one, regardless of the stock's true value. 😲📊 As long as the crowd believes, that belief alone can hold the line! 🛡️👥
Then, the question is, how do we sketch resistance and support levels on a chart? 📈🖊️
The recent chart for $AMZN provides a perfect example. Spot the highs, draw a horizontal line ✏️📏; find the lows, and draw another horizontal line. Just like that, you'll see a clear candlestick pattern emerge. 👀🕯️
It's like connecting the dots of the market's mood swings! 🎢😄
Actually, this kind of pattern has a special name - it's called a "trading range" or "range box." 📦📈
Take a look here, don't the candlesticks seem like they're contained within a box? 🤔🔄 It's as if the price action is playing a game of "don't touch the lava" with the floor and ceiling of the box! 🔥😅
A Step-by-Step Guide
Absolutely, box structures can be super handy during trading! 🧰📊 If you could buy at the bottom and sell at the top, you'd be raking in profits, right? 💸🚀 But how can we quickly spot these box structures? Enter the SRL indicator! 🌟🔍
How to use it on phone? Just click and add this indicator to your favorites!
Unsupported module.
Please view on mobile devices.
How to use it on pc?🚀📈 Here is a 3 min guide for you (it would be nice if you smashed that like button now)
Step 1: Fire up your PC and launch Moo. Pick a ticker - let's roll with NVIDIA ($NVDA). 🐄✨
Step 2: Dive into the stock page's lower right - the realm of Indicator Management. 🔧📉
Step 3: Hit "New tab" and mimic the setup from the snapshot below to enlist your SRL indicator. 📑👇
Step 4: Drop a comment, share your wisdom - is the SRL lighting up your trades? 🗨️💬
Step 1: Fire up your PC and launch Moo. Pick a ticker - let's roll with NVIDIA ($NVDA). 🐄✨
Step 2: Dive into the stock page's lower right - the realm of Indicator Management. 🔧📉
Step 3: Hit "New tab" and mimic the setup from the snapshot below to enlist your SRL indicator. 📑👇
Step 4: Drop a comment, share your wisdom - is the SRL lighting up your trades? 🗨️💬
Code (just copy and paste, easy!) (note: please turn off the auto translation)
{FIRST, CALCULATE THE ATR (AVERAGE TRUE RANGE)}
AT := 14;
TRV := MAX(MAX((H - L), ABS(REF(C, 1) - H)), ABS(REF(C, 1) - L));
ATR := MA(TRV, AT);
{THEN SET THE TIME PERIOD, CALCULATE THE AVERAGE, AND SET THE UPPER AND LOWER BANDS. TAKE THE AVERAGE OF CLOSING PRICES OVER THE SPECIFIED TIME PERIOD, THEN ADD OR SUBTRACT ATR TO SET A SIMPLE BOX RANGE}
TF := 20;
AV := EMA(C, TF);
HV := CONST(AV + ATR);
LV := CONST(AV - ATR);
{SET THE STARTING POINT TO 60 BARS AGO, AND THE END POINT TO THE LAST BAR}
COND := CURRBARSCOUNT = 60;
{DRAW LINES}
RLINE := DRAWLINE(COND, HV, ISLASTBAR, HV, 0), LINETHICK2, COLORFAC4C4;
SLINE := DRAWLINE(COND, LV, ISLASTBAR, LV, 0), LINETHICK2, COLORC4FAC4;
{PRICE ANNOTATIONS FOR THE LINES}
DRAWNUMBER(COND, HV - (HV - LV) * 0.2, ROUND2(HV, 2)), COLORFAC4C4;
DRAWNUMBER(COND, LV + (HV - LV) * 0.2, ROUND2(LV, 2)), COLORC4FAC4;
{PERCENTAGE BETWEEN THE RESISTANCE LINE & SUPPORT LINE}
DRAWNUMBER(COND, HV + (HV - LV) * 0.2, ROUND2((HV / LV - 1) * 100, 2)), COLORFF5252;
DRAWTEXT(COND, HV + (HV - LV) * 0.2, ' %.'), COLORFF5252;
{FIRST, CALCULATE THE ATR (AVERAGE TRUE RANGE)}
AT := 14;
TRV := MAX(MAX((H - L), ABS(REF(C, 1) - H)), ABS(REF(C, 1) - L));
ATR := MA(TRV, AT);
{THEN SET THE TIME PERIOD, CALCULATE THE AVERAGE, AND SET THE UPPER AND LOWER BANDS. TAKE THE AVERAGE OF CLOSING PRICES OVER THE SPECIFIED TIME PERIOD, THEN ADD OR SUBTRACT ATR TO SET A SIMPLE BOX RANGE}
TF := 20;
AV := EMA(C, TF);
HV := CONST(AV + ATR);
LV := CONST(AV - ATR);
{SET THE STARTING POINT TO 60 BARS AGO, AND THE END POINT TO THE LAST BAR}
COND := CURRBARSCOUNT = 60;
{DRAW LINES}
RLINE := DRAWLINE(COND, HV, ISLASTBAR, HV, 0), LINETHICK2, COLORFAC4C4;
SLINE := DRAWLINE(COND, LV, ISLASTBAR, LV, 0), LINETHICK2, COLORC4FAC4;
{PRICE ANNOTATIONS FOR THE LINES}
DRAWNUMBER(COND, HV - (HV - LV) * 0.2, ROUND2(HV, 2)), COLORFAC4C4;
DRAWNUMBER(COND, LV + (HV - LV) * 0.2, ROUND2(LV, 2)), COLORC4FAC4;
{PERCENTAGE BETWEEN THE RESISTANCE LINE & SUPPORT LINE}
DRAWNUMBER(COND, HV + (HV - LV) * 0.2, ROUND2((HV / LV - 1) * 100, 2)), COLORFF5252;
DRAWTEXT(COND, HV + (HV - LV) * 0.2, ' %.'), COLORFF5252;
Then, BOOM! 🔥 You will have a chart like this.
🧐🔍 Before We Dive Into the Indicator's Performance, Let's Decode the Script 📜💡
Step 1: Calculating ATR 📏🔢
ATR measures market volatility. It's a tool that averages out how much a stock price has moved per day over a given period, typically 14 days. You can think of it as the market's mood ring, showing you how nervous or chill traders are feeling. 🌡️📅
Step 2: Computing EMA 📈⚙️
EMA is your trading compass, pointing you towards the trend's direction. But, it isn't just a trend tracker, and it can show you the most recent mean price. It's smoother and quicker, compared to MA, to react to price changes, making it the go-to groove for traders riding the trend wave. 🏄♀️💨
Step 3: Marking the EMA ± ATR Zone 🎯🌐
🚀 EMA keeps you locked on the market's melody, while ATR adds the spice of excitement, showing how much the market can sway. Together, you've got a recipe for the sweet spot of price ranges. 🍲🧙♂️
Indicator Porformance
👓 Look closer, traders! SRL has a terrain preference: the flatlands of stock charts, where prices are in a holding pattern. 📉🔄
Given this premise, the practical significance of this indicator is: on average, the stock price volatility should be between the green line and the red line. 📊
When there's an upward or downward breakout, 📈📉 it means the day's price movement has exceeded the average level of the past 14 days (with ATR set to 14), and it warrants our attention. As shown in the chart below: 👀
When using this indicator, please stay patient. 🧘♂️ Breakouts of resistance and support levels often need to be confirmed with volume and other technical indicators. 📈📊 Since the two lines of the SRL indicator change daily and only apply to the current day's candlestick, backtesting with historical data is tough. You'll need to build confidence in it through your own experience 💪.
Remember to ❤ & 💬 + follow 🔔, gonna share more in the future~
Peace out, y'all!
🚀🚀🚀🚀🚀🚀
A kindly reminder: This is for informational purposes only and not financial advice. Make sure to take care of your own investments! 💼💡
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Trader into TA & ETFs. Try to offer deep insights on live trades & market trends.
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henryLiuu : Seems amazing. I will check it for sure.
BeautyWolf : Thanks for sharing!!
Mwine : Is that really the reason forming a resistance or support?
Ousit : good one.
pixiu88 : Thanks for sharing![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Space Dust : as long as the crowd believes.. QUOTE.. what crowd, there could be another crowd. your echo chamber doesn't allow to see.
turn.
the " crowd" thinks a stock can only go up, the media agrees, the CEO peacocks around..
that's a CROWD. and Consensus. and have numbers on their side.. but, it still falls.
no matter the public ZEAL, the analysts, experts, Jim Cramer(s), .. and then
when " noone " expects.. IT FALLS. completely against the crowd..
how can we LEARN to spot this.. worm
Bull-a-Bong : nak join group
Max Lau82 : Hi, the percentage figure cramp together, what should I do to rectify it?
Max Lau82 :
74076295 : Thanks for shar
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