Support and Resistance Breakouts with SMA and ADX Filters

Summary

This strategy builds support and resistance levels from pivot highs and lows, then looks for price to cross back through a level. It considers long entries when price closes above a support level while above a 50-period simple moving average; short entries require a close below resistance while under that average. Both directions also require ADX to exceed a threshold. The description specifies a one-hour chart, keeps up to five recent levels, and spaces new levels to avoid crowding.

Positions use fixed percentage profit targets and stop losses, with different long and short profit targets. The document explains risks including false breakouts, stale historical levels, lagging trend confirmation, and parameter sensitivity, and suggests testing alternatives such as ATR-based exits, volume confirmation, or higher-timeframe levels. It provides rules and implementation details but no performance results, so the claimed reduction in false signals is not supported by reported testing. The source logic also describes a close returning across a level, which may behave differently from a conventional breakout above resistance or below support.

Key ideas

• Pivot highs and lows provide candidate support and resistance levels.
• Long and short signals require a level cross, alignment with a 50-period average, and ADX above a threshold.
• The system limits stored levels and separates nearby levels to reduce clustering.
• Fixed percentage targets and stops define trade exits, but may not suit all volatility conditions.
• The document gives no measured results, and its entry rules may not represent conventional breakouts.

Tags

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