Range Breakout Signals [AlgoAlpha]

3월 15일

OVERVIEW

This script detects range-bound market conditions and breakout signals using a combination of volatility compression and volume imbalance analysis. It identifies zones where price consolidates within a defined range and highlights potential breakout points with visual markers. Traders can use this to spot market transitions from ranging to trending phases, aiding in decision-making for breakout strategies.

CONCEPTS

The script measures volatility by comparing the ratio of the simple moving average (SMA) of price movements to their median value. When volatility drops below a threshold, the script assumes a range-bound market. It then tracks the cumulative volume of buying and selling pressure to assess breakout strength. The approach is based on the idea that market consolidation often precedes strong moves, and volume distribution can provide clues on the breakout direction.

FEATURES

1. Range Detection: Uses a volatility filter to identify low-volatility zones and marks them on the chart with shaded boxes.
   
2. Volume Imbalance Analysis: Evaluates cumulative up and down volume over a confirmation period to assess directional bias.
   
3. Breakout Signals: When price exits a detected range, the script plots breakout markers. A ▲ symbol indicates a bullish breakout, and a ▼ symbol indicates a bearish breakout. Additional "+" markers indicate strong volume imbalance favoring the breakout direction.
   
4. Adaptive Timeframe Volume Analysis: The script dynamically adjusts its volume calculation based on the chart’s timeframe, ensuring reliable signal generation across different trading conditions.
   
5. Alerts: Notifies traders when a new range is detected or when a breakout occurs, allowing for automated monitoring.
   

USAGE

Traders can use this script to identify potential trade setups by entering positions when price breaks out of a detected range. For breakout confirmation, traders can look at volume imbalance cues—bullish breakouts with strong buying volume may indicate sustained moves, while weak volume breakouts may lead to false signals. This script is particularly useful for breakout traders, range traders seeking to fade breakouts, and those looking to automate trade alerts in volatile markets.

3월 16일

릴리즈 노트

- Fixed an issue where tickers with prices less than 1 caused the volume balance boxes to snap to zero

- Removed dynamic LTF and changed to a manual input instead