TradeBreakOut: Measuring Distance to Local Support and Resistance Breaks

Summary

The TradeBreakOut indicator measures how far price is from breaking through recently established local support or resistance, with those levels derived from local lows and highs. Its period setting controls sensitivity: longer periods produce fewer signals, which the document describes as higher quality, though it gives no quantitative evidence for that claim.

The price input can use closes or high/low values. The document suggests closes for daily or weekly horizons and high/low prices for shorter horizons. A rising green line reaching zero marks an upside break of a local maximum; a falling red line reaching zero marks a downside break of a local minimum. Distance from zero is described as indicating how far price remains from a break, and thus a lower likelihood of an immediate breakout. No backtest, market context, or risk rules are provided, so these interpretations should be treated as indicator guidance rather than validated trading results.

Key ideas

• The indicator tracks price distance to breaks of support or resistance defined by local extrema.
• A longer lookback produces fewer breakout indications, which the document characterizes as better quality without supplying tests.
• Closes are suggested for longer horizons, while highs and lows are suggested for shorter horizons.
• A rising green line at zero signals an upside break, while a falling red line at zero signals a downside break.

Tags

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