Support and resistance levels

Support and resistance levels

29 October 2018, 22:46
Aleksei Stepanenko

This page describes the possibilities of working with the RealLevels MT4 indicator.

The market is economics, psychology, mathematics, and randomness. We are not able to comprehend the whole meaning of what is happening, but for successful trading such knowledge is not required. The important thing is that any market is not completely random. The market is created by people, and includes their emotional behavior and stereotypes of thinking. Therefore, in such a market there are certain patterns that can be recognized. Of course the levels are a pattern. The figure below shows a typical price chart.

This chart is not unique. All markets consist of such charts. The main time the price is between the levels, and transitions through the levels occur much less often. The levels influence the price movement. Overcoming each level weakens the movement and brings a turnaround time. It should be noted that any level is not an insurmountable barrier to the price, rather it should be seen as a temporary obstacle.

The principle of the indicator

The indicator compares the stay time of the price on the whole path of its movement. Places where the price was much less time, are the levels. The calculation does not use subjective formulas: Fibonacci numbers, Pivot points, moving averages and any others. The market does not know anything about artificial lines on our chart. On the contrary, this indicator reads the patterns created by the market itself and presents them in a convenient form for further analysis. Knowing where the price will meet an obstacle gives advantages in trade.

Loading the indicator

When launching the indicator, the standard window with input parameters can be left blank. All parameters can be easily changed while working on the chart.

For the first time with new input parameters, the indicator calculates levels on the entire available history. This calculation takes time. During the download, the terminal remains free, and you can continue to work in it. The progress bar shows the percentage of the calculation performed. All calculated data is saved to a file. In subsequent times, the indicator will load for a few seconds.

The tester mode is slightly different from the terminal mode, because the data will be used for testing immediately. Therefore, in the tester, when preloading the data, the program will be busy and the progress bar will not be shown. It will be necessary to wait for the indicator to be fully loaded.

Input parameters

The indicator shows two types of levels: normal and strong. For each type, you can set the minimum distance between levels (in points). The greater the distance, the less will be located levels and more of their strength. In the indicator the point of non-cent accounts is accepted as the standard. For example, in EURUSD one point is equal to 0.0001 USD. For each level type you can set any color on the chart.

In the terminal mode, you can select any time frame to calculate the indicator. Smaller time frames are more detailed, but the calculation time will increase. The builds on different time frames are different, but the general tendency remains. In the tester mode, the calculation is performed only on the current time frame.

Before the indicator is unloaded, all the specified parameters are saved and used at the next indicator loading. This information is important for studying price behavior.

Received information

The chart displays not only the current levels, but also the levels of all available history. The location of the levels changes over time, some levels disappear, others appear, and this is true. However, there is one feature. In places where the price appeared for the first time, the levels are unstable, because there is not enough historical data for accurate construction. These places are the beginning of the chart and the most extremes of the whole history. Here, the position of the levels may be adjusted over time, so use the obtained information with caution. In all other places, the levels are determined accurately.

A separate table displays complete information about the levels closest to the price:

  • level price and the position of the current price,
  • distance from the price to the level (in points),
  • distance between adjacent levels (in points),
  • age of the level (the number of days elapsed since the last intersection of the price and the level),
  • difference between the ages of the levels,
  • gravity (the coefficient showing the ratio of the time the price stays above and below the level).

The article is currently under active writing, so the information will be constantly added.

P.S. English is not my native language, and if the text is written in a non-literary language, I would appreciate your corrections. Email is in my profile, in all contacts. Thanks a lot.

Good luck!

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