AutoTrendLines: Drawing Support and Resistance from Price Extremums

Summary

This document explains an indicator that automatically draws support lines from price lows and resistance lines from highs. It ignores the current bar when identifying points and updates the plotted lines when new bars arrive or the selected coordinates change. The indicator defines an extremum as a bar whose neighboring bars have higher lows or lower highs, similar to a fractal turning point.

It describes two construction methods: connecting a pair of extrema, or selecting an extremum and choosing a line according to the smallest price delta from a specified bar offset. Parameters control the extremum widths, offset, and whether the bar beside the left point is included. The author recommends making the left extremum more significant and inspecting behavior with small settings before use. The text offers implementation guidance and a preference for the more dynamic second method, but provides no tests or evidence of profitability.

Key ideas

• The indicator draws support through lows and resistance through highs using identified price extrema.
• An extremum is defined by neighboring bars and is similar to an N-bar fractal.
• One method connects two extrema, while another chooses a line using price delta from an extremum.
• Parameters determine the search widths, offset, and treatment of a neighboring bar.
• The document gives setup recommendations but no empirical evidence of trading performance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.