Indicators
Market Structure and Price Action Toolkit

Market Structure and Price Action Toolkit

By
Zeiierman
on
June 11, 2024

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This comprehensive Market Structure and Price Action toolkit integrates pioneering price action concepts, including fractal-based market structure, grid-price action system, retail and institutional levels/zones, liquidity concepts, and a plethora of advanced customization options to give you a trading advantage via price action automatically.

Different from traditional technical indicators, which can be lagging, complex, and cluttered, this indicator focuses solely on raw price data to deliver accurate and real-time insights. All the features in this script originate exclusively from price action, concentrating on fractals-based swing highs, swing lows, and market structure. This enables users to automate their price action analysis across any market or timeframe

The toolkit focuses on the real-time application of price data rather than historical data to ensure its usefulness for price action and smart money (ICT) traders. With this indicator, users can automate their price action analysis across various markets and timeframes, gaining a significant edge in their trading strategies.

Features and How They Work

Trading Systems

Market Structure:

    Market Structure deals with the interpretation of price action that forms the market structure, focusing on understanding key shifts and changes in the market that may indicate where ‘smart money’ (large institutional investors and professional traders) might be moving in the market. This feature is based on real-time fractals instead of static pivot points. Fractals are based on the idea that markets are patterned, and those patterns repeat themselves on all scales – hence, the term “fractal”, which means “fraction of the whole”. The function uses fractal zones that refer to areas where the price is likely to experience a change in direction. These zones are identified by observing a series of fractal points.

Grid:

    The grid system works similarly to the market structure but displays the data as a grid of support and resistance zones. This is a new an unique approach to understanding market structure. It might be a more convenient way for traders to understand how to act.

Retail Zones

Support/Resistance:

    Support and Resistance zone are often seen and displayed with a delay. This feature is 100% real-time and displays SR levels as the price reacts and forms new highs and lows.

Confirmed Support/Resistance:

    As the name suggests, the confirmed zone is first displayed on the chart when the price has reacted to a high/low formation over x period of time. This feature is handy to trade retest after breakouts of the zone.

We wanted to keep the retail zones simple regarding how they work and function to help all kinds of traders understand how to use them.

Institutional Zones

Supply/Demand:


Calculating supply and demand in its raw form is challenging due to the complexity and dynamism of financial markets. However, the function uses several concepts to gauge supply and demand levels.

  • Buying and Selling pressure: The buying pressure represents the highest price point (over x period and volume), while the selling pressure price represents the lowest price point (over x period and volume). The gap between the two is known as the buying/selling pressure spread. A narrow spread often signifies high liquidity and balanced supply and demand, while a wider spread might indicate imbalances.
  • Price Trends: Upward price movements indicate higher demand, while downward trends may suggest increased supply.

Order blocks:

    Order blocks are similar to supply/demand, and the main difference is that an order block is created at specific price action and market structure patterns.

How to use the Market Structure Toolkit

Market Structure

Market Structure + Confirmed S/R

Grid System

Demand Zone

Supply Zone

Order Block

Support/Resistance Zones

Confirmed Support/Resistance Zone

Retest of SR Levels

Why Use Price Action and Market Structure

A comprehensive trading strategy often involves using both price action and market structure. Traders can use price action to understand the immediate behavior of the price and market structure to understand the broader context within which the price is moving.

Market Structure combined with Price Action refers to the observable pattern of price movement. Traders use this structure to identify trend direction (up, down, or sideways), market phase (trend or range), and key price levels (like support and resistance).

Here are some core concepts within price action trading:

  • Trend Identification: This is a fundamental aspect of price action trading. By simply looking at the raw price data on a chart, traders can identify whether the instrument is in an uptrend (making higher highs and higher lows), a downtrend (making lower highs and lower lows), or ranging sideways.
  • Support and Resistance Levels: These are horizontal lines drawn on a chart where the price has historically had difficulty moving beyond. Support is a price level where buying pressure is strong enough to prevent the price from falling further, while resistance is a level where selling pressure is strong enough to prevent further price increases.
  • Candlestick Patterns: Price action traders rely heavily on candlestick patterns, which can provide a lot of information about market sentiment.
  • Chart Patterns: In addition to individual candlestick patterns, price action traders often look for larger chart patterns like double tops/bottoms, triangles, wedges, head and shoulders patterns, and more. These patterns can take longer to form but can also provide insight into potential price movement.
  • Price Zones: Rather than exact price levels, many price action traders consider zones of support and resistance, understanding that market behavior isn’t always perfectly precise. A zone might cover a small range of prices at which the market has repeatedly reversed in the past.

The idea behind price action trading is that the price itself can provide clues to what the market might do next. Traders who follow this approach believe that price is the final determinant of value and contains all the information needed.

Any Alert Function Call

This function allows traders to combine any feature and create customized alerts. These alerts can be set for various conditions and customized according to the trader’s strategy or preferences.

In conclusion

This toolkit is particularly useful for price action and smart money traders, as it prioritizes real-time application of price data, which in turn allows a more responsive and informed decision-making process in trading.

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