Building Demand and Supply Zones from Price Pivots

Summary

This ProRealTime indicator identifies support and resistance areas by grouping historical price pivots into price bands. Its settings control the pivot lookback, whether pivots use highs and lows or open and close values, the maximum band width, the number of displayed zones, and the historical period used to assess zone strength. The code estimates strength from the number of pivots grouped into a band and how often recent highs or lows fall within it, then displays the strongest areas as rectangles. It can also optionally plot moving averages.

The accompanying discussion suggests using demand areas as possible buying or stop reference points and supply areas as possible selling or profit-taking references. It proposes checking zones alongside trend, volume, momentum divergences, or chart patterns for added context. These are discretionary interpretations, not tested trading rules: the document supplies no performance evidence, and its claims that price reacts predictably around zones are not substantiated. Pivot confirmation and parameter choices may also affect how zones are identified and displayed.

Key ideas

• The indicator detects price pivots and groups nearby levels into support and resistance bands.
• Pivot period, input price source, channel width, and historical lookback affect the zones produced.
• Zone strength combines grouped pivot points with the frequency of recent highs and lows inside a band.
• The author suggests treating zones as potential entry, exit, stop-loss, or take-profit references.
• Trend, volume, momentum, and chart-pattern tools are suggested as possible confirmation filters, but no results validate them.

Tags

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