Support & Resistance Indicators

Support and resistance indicators help identify key price levels where the market tends to reverse or pause. These levels act as psychological barriers and are crucial for entry, exit, and stop-loss placement.

Available Support & Resistance Indicators

Williams Fractal

Identifies potential reversal points by detecting 5-bar patterns where the middle bar is either the highest high or lowest low.

Overview

Williams Fractals mark potential turning points in the market by identifying local highs and lows. They are used to spot potential support and resistance levels.

Configuration

indicator: Williams_Fractal
period: 2           # Lookback period (2 = 5-bar pattern)

Parameters

Interpretation

Fractal Types

• Up Fractal: Potential resistance level (high surrounded by lower highs)
• Down Fractal: Potential support level (low surrounded by higher lows)
• Fractal Break: Support/resistance level breach

Applications

• Support/Resistance: Key price levels
• Entry Points: Break of fractal levels
• Stop Placement: Beyond fractal levels
• Market Structure: Swing highs and lows

Trading Signals

Basic Signals

1. Buy: Price breaks above up fractal
2. Sell: Price breaks below down fractal
3. Support: Price bounces from down fractal
4. Resistance: Price rejects at up fractal

Advanced Applications

• Trend Structure: Connect fractals to see trend
• Range Trading: Trade between fractal levels
• Breakout Trading: Enter on fractal breaks
• Stop Placement: Use fractals for stop levels

Best Practices

Signal Quality

• Higher timeframe fractals: More significant levels
• Multiple touches: Stronger support/resistance
• Volume confirmation: Validates fractal breaks
• Trend alignment: Trade with overall trend

Risk Management

• Stop beyond fractal: Allow for false breaks
• Multiple timeframe: Check fractal alignment
• Volume confirmation: Ensure genuine breaks

Example Strategies

Fractal Breakout

strategy: Fractal_Breakout
indicators:
  - Williams_Fractal:
      period: 2
  - Moving_Average:
      period: 50
      type: EMA
  - Volume:
      ma_period: 20
rules:
  - Buy: Price breaks above up fractal + above 50 EMA + volume > average
  - Sell: Price breaks below down fractal + below 50 EMA + volume > average
  - Stop: Beyond the fractal level

Fractal Support/Resistance

strategy: Fractal_Levels
indicators:
  - Williams_Fractal:
      period: 2
  - RSI:
      period: 14
rules:
  - Buy: Price bounces from down fractal + RSI oversold
  - Sell: Price rejects at up fractal + RSI overbought
  - Stop: Beyond fractal level

Advantages

• Objective support/resistance identification
• Works on all timeframes
• Clear entry and exit points
• Helps define market structure
• Useful for stop placement

Limitations

• Lagging signal (requires confirmation bars)
• Many fractals may not hold as support/resistance
• False breakouts common
• Works best with other indicators
• Can generate excessive signals

Combining with Other Indicators

Works well with:

• Moving Averages: Trend direction filter
• Volume: Confirm breakout strength
• RSI/Stochastic: Entry timing at levels
• Fibonacci: Level confluence
• Support/Resistance: Level validation

AI Agent Configuration

agent_config:
  indicators:
    - Williams_Fractal:
        period: 2
    - Moving_Average:
        period: 50
        type: EMA
    - Volume:
        ma_period: 20
    - RSI:
        period: 14
  prompt: |
    Use Williams Fractals for support/resistance trading:
    
    Buy signals:
    - Price breaks above recent up fractal
    - 50 EMA confirms uptrend (price above)
    - Volume above 20-period average
    - RSI not overbought (<70)
    
    Sell signals:
    - Price breaks below recent down fractal
    - 50 EMA confirms downtrend (price below)
    - Volume above 20-period average
    - RSI not oversold (>30)
    
    Risk management:
    - Stop loss beyond the fractal level
    - Only trade fractal breaks aligned with trend
    - Wait for volume confirmation on breaks
    
    Support/Resistance bounces:
    - Buy bounces from down fractals in uptrends
    - Sell rejections at up fractals in downtrends

Related Indicators

• [Support and Resistance Lines](basic support/resistance concepts)
• [Pivot Points](traditional pivot calculations)
• [Fibonacci Retracements](retracement levels)