[blackcat] L1 Mel Widner Auto Support and Resistance

2021년 6월 25일

Level: 1

Background

This indicator/formula was presented in the May 1998 issue of the ‘Technical Analysis of Stocks and Commodities’ magazine. The article was titled “Automatic support and resistance” the article described an approach to finding support and resistance levels on a chart.


Function

Support and resistance analysis is a proven method for selecting key price levels for trading decisions; traders usually perform the analysis by hand. The automatic charting method and new oscillators presented here are easy to implement and give a precise comparison of price to these important levels. Suppose prices are moving higher, fed by steady cash flow and favorable expectations. Then, at some point, the advance begins to slow. Upward momentum is still dominant, but at that point it is diminishing and the rate of rise is decreasing, evidence of resistance. It is like throwing a ball into the air; the ball starts with initial momentum, then slows under the influence of gravity before eventually falling.

Prices behave in a similar manner. After opposing resistance forces are applied for a time, prices slow, finally stop, and reverse direction. The turning point is a resistance level and is the highest high price for that particular period. The converse is true for declining prices. A slowing decline results from support forces and a support level is established at the point where prices turn upward.

Simply, forces cause acceleration. Market forces do not directly produce momentum, but rather momentum changes. These momentum changes in turn are integrated or accumulated to establish momentum. The presence of market forces is evident when the slope of prices, or momentum, changes over time. The effect is most dramatic when forces also change, triggered by price moves or changes in expectations, and abrupt reversals occur. Examination of price histories can confirm the presence of these features.

Two oscillators are defined: the WSO (Widner support oscillator) and the WRO (Widner resistance oscillator). The WSO compares the current close with the most recent six support levels. Values range from zero to 100. WSO = zero means that the close is below all of the six support levels, and
WSO = 100 means that the current close is above all of the six support levels. Changes in WSO indicate changes in support, either breaking of an old level or establishing a new one. The WSO abd WRO are defined as:

WSO = 100( 1 – (INT(S1/C) + INT(S2/C) + INT(S3/C) + INT(S4/C) + INT(S5/C) + INT(S6/C)) / 6)


WRO = 100( 1 – (INT(R1/C) + INT(R2/C) + INT(R3/C) + INT(R4/C) + INT(R5/C) + INT(R6/C)) / 6)


Consequently, WSO and WRO can cross, but this is very uncommon.
Enter long when support is strong and resistance is weak or enter when support is building.


Key Signal

wso --> Widner support oscillator.
wro --> Widner resistance oscillator.

Remarks

This is a Level 1 free and open source indicator.

Feedbacks are appreciated.

4월 18일

릴리즈 노트

OVERVIEW
This script implements an advanced L1 Mel Widner algorithm for automatically identifying support and resistance levels in financial markets. It utilizes customizable oscillators to detect potential trading opportunities and generates real-time buy/sell signals based on crossover patterns. The indicator is designed to work across various timeframes and asset classes, providing traders with actionable insights for their trading strategies.

FEATURES

• Dual Oscillator System: Combines support and resistance oscillators for comprehensive market analysis
• Customizable Parameters: Adjustable strength, length, and average length inputs for optimal performance
• Smoothed Indicators: Uses ALMA (Arnaud Legoux Moving Average) for reduced noise and clearer signals
• Visual Alerts: Real-time BUY/SELL labels displayed directly on the chart
• Alert Notifications: Built-in alert conditions for automated signal notifications

HOW TO USE

Parameter Configuration:

Adjust Strength to control sensitivity to price movements
Modify Length to influence the lookback period
Fine-tune Average Length for smoother oscillator readings
Signal Interpretation:

BUY signals appear when support oscillator crosses above resistance oscillator
SELL signals trigger when resistance oscillator crosses below support oscillator
Signals are only generated when oscillator values exceed -50 threshold
Integration:

Overlay with other technical indicators for enhanced analysis
Utilize alert conditions for automated trading systems
LIMITATIONS

• May produce false signals during high volatility periods
• Best suited for trending markets rather than ranging conditions
• Requires proper parameter tuning for specific market conditions

NOTES

• Developed by blackcat1402
• Based on the Mozilla Public License 2.0
• Compatible with TradingView's Pine Script v5