Breakout/Retest Indicator + EA based on Indicator

Indicator + EA based on Indicator

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STEP 1: INDICATOR

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// GENERAL: Breakout and retest indicator.

I’m looking for an indicator that identifies mostly MINOR swing highs and lows and marks them as support and resistance zones. The indicator should give out a signal when price breaks through those zones. In the second step, the indicator should also be able to identify when price comes back to those zones, after the breakout, to retest the specific support or resistance zone, and gives a signal when price accepts the zone through price moving away from the zone.

// THE IDEA:

Picture 1

The idea is that minor support and resistance zones are identified and “remembered” for the future. As soon as price revisits these zones and accepts them, a signal is given. The time (number of candles) between the breakout and retest should be adjustable in terms of minimum and maximum. As soon as a retest has been validated or violated, the zone is irrelevant for the future, as well as when the maximum time (number of candles) has been reached.

// VALIDATION OF SIGNALS

Breakout signal is pretty clear. Signal is given as soon as price breaks through the MINOR support or resistance zone and closes below/above.

Retest signal:

For both signals, support and resistance, it is the same, but for simplicity reasons, I will only explain the rules for a break through the resistance zone (BUY TRADE).

When a resistance zone is broken, price needs to come back down by printing at least 1 red candle. Price then needs to reverse at the broken resistance zone, now potential support zone. When a green candle is printed from the new support zone, a signal is given (+ different variations of a valid signal, more on that later). Once the retest zone is violated, the level becomes irrelevant and a new retest zone needs to be established.

Example signal:

Picture 2

Since support and resistance can be drawn either with open/close of swing high OR at the ultimate high (wick), it would be great if the indicator draws a zone from open/close to the wick of the swing high to identify the zone for the retest. When a retest after the breakout happens in the zone buy coming back down through a red candle or red candles and the confirming the retest by printing a green candle, a signal is generated (Signal 2). The retest can also happen through the wick of the green retest candle. The distance between the open price level of the retest candle and the retest zone needs to be adjustable in amount of pips, in order to filter out long wick retest signals.

Picture 2.0

Example Minor Level Retest by One Reversal Candle:

Picture 2.1

The indicator really needs to be able to identify minor swing lows and highs which are retested by price.

Example signal candle type 50%:

Picture 3

// INPUT PARAMETERS

Signal provided :

- Breakout

- Retest

- Both

Parameter for identifying swing highs/lows (support and resistance zones) -> how small / large are the swings

Number of candles between support/resistance development and breakout allowed (minimum AND maximum)

Number of candles between breakout and retest (minimum AND maximum) allowed

Extra Buffer Signal Candle (Open of retest candle: Distance to the Support/Resistance zone in pips allowed)

Retest: Signal candle: 

- All candles

- Closing at above/below (for example) 50% mark of full range, percentage needs to be adjustable (Picture 3)

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Example for such an indicator on tradingview "Support & Resistance With Breakout & Retest by TheHippieTrader" :

What I like about this indicator:

-          How the support zones and resistance zones are visualized on the chart

-          How the size of the zones are identified and visualized, especially at low “lookback range” settings -> minor support and resistance zones are identified

What I don’t like on this indicator and where I would like improvement

-          The support/resistance zones are not dragged long enough into the future. As mentioned, I would like to be able to adjust the time (number of candles) of how long such a level is valid and should be considered for retests.

-          The step “potential retest” step, which the tradingview indicator has, is not needed!

-          The identification of the retest signal is not great on this tradingview indicator. Please use the rules described above.

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STEP 2: EXPORT ADVISOR

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The EA should be based on the indicator and triggers trades based on the indicator signals. Parameters for the signal, same as in the indicator settings, should be adjustable in the EA as well.

Additionally, the EA should have a trend filter in terms of a MA. I would like to adjust the length of the MA which should be used as a filter. Example: 200 MA. If price is above the 200 MA, only buy signals should be executed. If price is below the 200MA, only sell signals should be executed.

The EA should have different trade management options:

Lot Size

Fix lot sizes

dynamic lot size based on x balance

Entry Signal (based on indicator above)

Breakout

Retest

Both

All settings for tweaking the entry signal. Same options as the indicator.

Trend filter

On / Off

MA period adjustable

Take profit and stop loss options (want to be able to pick one option from all the offers below for SL as well as TP):

Take Profit

-Fix pip amount

-Risk reward ratio based on SL

-Based on ATR multiple (ATR period and multiple should be adjustable)

Stop Loss

- above/below retest with fix pip amount between OR with multiple of ATR between (Picture 5)

- above swing high/ below swing low of price movement before breakout (Picutre 5)

- Based on ATR multiple (ATR period and multiple should be adjustable)

Trade Management Options:

Simple trailing option (Start, Step)

Trailing option based on ATR

Stop loss to break even option

Partial Close (profit) of x% at x% distance to TP

Partial Close (loss) of x% at x% distance to SL

Classic Grid Loss Side

Size of Grid

- Fix amount for all grids sizes

- Individual grid size for each grid

Grid Trades Lot Sizes

- Multiplier option for lot size of grid trades

- Individual Lot Sizes for each additional grid trade

Max numbers of additional grid trades

-> All additional trades need to accept the stop loss from initial trade