OPEN-SOURCE SCRIPT

Key Zone Locator

Updated
The "Key Locator" indicator identifies important price levels on a chart by analyzing historical data. It does this by:
  • Counting Touches: It calculates how many times the price touches each level within a specified period. This helps identify levels that the market frequently interacts with, which can indicate significant support or resistance.
  • Measuring Volume: It also sums up the trading volume at each level during the same period. High volume at a particular level can suggest strong interest or activity, making that level more significant.s based on historical market activity.

By combining these two metrics—touches and volume—the indicator highlights the most important price level on the chart, helping traders make informed decisions based on where the market has shown significant activity in the past.

Level Calculation:
The indicator first identifies the highest and lowest prices over a specified period, which is determined by the length parameter. It then divides this price range into 200 equal segments, creating potential key levels across the chart. Each segment represents a level where the price might show significant activity.

Metric Calculation:
For each of these levels, the indicator calculates two key metrics. First, it counts how many times the price touches or crosses each level during the specified period. Second, it sums up the trading volume associated with these touches at each level. This dual analysis helps in identifying levels that are not only frequently interacted with but also have substantial trading activity.

Normalization:
To facilitate comparison between different levels, the indicator normalizes both the touch count and the volume for each level to a scale from 0 to 10. This involves dividing each metric by its maximum observed value in the period and scaling it accordingly, ensuring that both metrics are on a comparable scale.

Scoring and Balancing:
Each level is assigned a score based on a weighted average of its normalized touch and volume scores. The weight_balance parameter allows users to adjust the emphasis between touches and volume. A higher weight on touches will prioritize levels frequently interacted with, while more emphasis on volume will highlight levels with significant trading activity.

Identify Key Level:
Finally, the indicator identifies the level with the highest combined score as the most significant. This key level is plotted on the chart in red, providing traders with a visual indication of potential areas of support or resistance based on historical data.

This comprehensive approach allows traders to pinpoint where crucial market activity has occurred, aiding them in making strategic decisions based on historical price behavior and trading volumes.

Please note that while the "Key Locator" indicator provides valuable insights based on historical data, it does not guarantee future performance or outcomes. Trading involves risks, and it's important to use this tool in conjunction with other analysis methods and risk management strategies. Always consider your financial situation and consult with a financial advisor if necessary before making trading decisions.
Release Notes
Minor changes
Release Notes
Minor Update: Bugs fixed
keylevelkeylevelskeyzonelevelsPivot points and levelsSupport and ResistanceTrend Analysis

Open-source script

In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.

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