Extrapolating Support and Resistance from Pivot Highs and Lows

Summary

This indicator draws projected support and resistance lines by connecting selected past pivot highs and pivot lows, then extending each line forward. A sensitivity setting controls how many bars are used to confirm a pivot: shorter settings detect smaller swings, while longer settings emphasize broader moves. Users can select which detected pivots serve as the two endpoints for each line.

The method can also use a custom input, such as a moving average or oscillator, instead of price highs and lows. The document recommends considering a logarithmic price scale when price growth is nonlinear, and adjusting an oscillator whose peaks vary greatly in magnitude so its pivot levels remain useful. It illustrates setup and parameter choices but provides no performance testing or evidence that projected levels predict reversals. Pivot confirmation requires later bars, and the linear projection assumes a roughly linear path; the lines should therefore be treated as visual estimates rather than reliable forecasts.

Key ideas

• The indicator connects selected confirmed pivot highs and lows to project resistance and support lines forward.
• The pivot sensitivity setting changes whether the tool identifies small or longer-term swings.
• Users can choose the pivot endpoints and optionally apply the method to another indicator's output.
• A logarithmic chart scale can make nonlinear price growth appear more suitable for linear projections.
• Oscillators with changing peak magnitude may need parameter adjustments for more consistent pivot interpretation.

Tags

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