Swing Breakout Sequence [LuxAlgo]

23 oct

The Swing Breakout Sequence tool enables traders to identify a directional price action scalping sequence comprising two unsuccessful breakouts in the same direction, with the expectation of a third.

🔶 USAGE



This sequence looks for pressure on one side of a swing zone.

The market tried to break out of the zone twice but failed. This led to a pullback into the zone after each attempt. Once a reversal inside the zone is identified, the sequence is complete. It is expected that the market will move from the final reversal within the zone to the final breakout attempt outside the zone.

The sequence of price action is as follows:

• Point 1: Breakout attempt out of the swing zone
  
• Point 2: Pullback into the zone
  
• Point 3: Breakout attempt out of Point 1
  
• Point 4: Pullback into the zone, tapping into Point 2 liquidity
  
• Point 5: Reversal structure with Point 4 in the form of a double top or double bottom
  

This sequence assumes traders will be caught off-guard when they try to capitalize on the initial breakout at Point 1, which is likely to result in a loss. If the breakout at Point 3 fails, all traders will be caught out and switch positions.

If there is enough pressure in the swing zone to cause a reversal at Point 5, the trapped traders could be the start of the next breakout attempt.

🔹 Sequence Detection



Traders can define sequence behavior and adjust detection with three parameters from the Settings panel.

Disabling Points 4 and 5 will detect the most uncompleted sequences.

🔹 Showing/Hiding Elements



Traders can change the look of sequences by showing or hiding their parts using the Style settings.

🔶 SETTINGS

• Swing Length: Number of candles to confirm a swing high or swing low. A higher number detects larger swings.
  
• Internal Length: Number of candles to confirm a internal high or internal low. A lower number detects smaller swings. It must be the same size or smaller than the swing length.
  

🔹 Detection

• Point 4 Beyond Point 2: It only detects sequences where Point 4 is beyond Point 2.
  
• Show Point 5: Enable/disable Point 5 detection.
  
• Require Equal H/L at Point 5: Enable/Disable double top/bottom detection at Point 5 within a given threshold. A bigger value detects more sequences.
  

🔹 Style

• Show Sequence Path: Enable/disable a line between sequence points.
  
• Show Boxes: Enable/disable colored boxes for each sequence.
  
• Show Lines: Enable/disable horizontal lines from each point of the sequence.
  
• Default Color: Define the color or enable/disable auto color.