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Want to create a strategy for price levels that I could enter into or fail against but am a bit lost as to where to start. Does anyone have any recommendations or shared code to help with this? I attached a pic of an example of highs and lows that would love a strategy to easily identify and create rules to trade off of. I'm sure I can easily create the rules, I just want to figure out the easiest way for a strat to identify these support and resistance levels. Thanks for the help.
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Not sure what platform you're using (if any), but look into fractals and/or pivots that are generally calculated by looking ahead/behind a particular bar to determine whether it was a reversal point (I generally use 5 for left-hand and 2 for right-hand for short term but those can be increased to larger values for fewer longer-term reversal points, albeit with the associated additional lag to go along with it).
The TradeStation 10 chart below uses the "Pivot High" (cyan) and "Pivot Low" (magenta) indicator shown as dots...the cyan numbers at those points are another indicator I wrote that reports the # ticks in that move.
As a programmer for 40+ years, my goal has always been geared toward 100% automation - sadly, ALL retail platforms lack in one or more areas when it comes to tick-level playback & analysis so I ended up writing my own platform (currently in Rust) which has taken a LONG time to complete (but is close). That being said, pivots/fractals have always been extremely important to me, particularly for playing "connect the dots" to determine breakout/down levels when trading manually/discretionary. As such, linear regression analysis (using recent pivots) can help quite a bit but isn't a holy grail either.
I'd think using the ZigZag indicator to find the levels might work? I've made indicators that find major S/R using the ZZ. In simple terms, just find where the ZZ paints a high w/ a lower value (reversed for support levels) on either side and then whatever the value of the high or close of that bar could be used as "R". Keep in mind that the ZZ is a 'repainting' indicator and you'd need to ensure that it's past the point of being able to repaint before that S/R level was considered 'secure', fwiw.