Pure Price Action Structures [LuxAlgo]

Jul 11

The Pure Price Action Structures indicator is a pure price action analysis tool designed to automatically identify real-time market structures.

The indicator identifies short-term, intermediate-term, and long-term swing highs and lows, forming the foundation for real-time detection of shifts and breaks in market structure.

Its distinctive/unique feature lies in its reliance solely on price patterns, without being limited by any user-defined input, ensuring a robust and objective analysis of market dynamics.

🔶 USAGE



Market structure is a crucial aspect of understanding price action. The script automatically identifies real-time market structure, enabling traders to comprehend market trends more easily. It assists traders in recognizing both trend changes and continuations.



Market structures are constructed from three sets of swing points, short-term swings, intermediary swings, and long-term swings. Market structures associated with longer-term swing points are indicative of longer-term trends.



A market structure shift (MSS), also known as a change of character (CHoCH), is a significant event in price action analysis that may signal a potential shift in market sentiment or direction. Conversely, a break of structure (BOS) is another significant event in price action analysis that typically indicates a continuation of the prevailing trend.

However, it's important to note that while an MSS can be the first indication of a trend reversal and a BOS signifies a continuation of the prevailing trend, they do not guarantee a complete reversal or continuation of the trend.

In some cases, MSS and BOS levels may also act as liquidity zones or areas of price consolidation, rather than indicating a definitive change in market direction or continuation. Traders should approach them with caution and consider additional factors to confirm the validity of the signal before making trading decisions.

🔶 DETAILS

🔹 Market Structures

Market structures are based on the analysis of price action and aim to identify key levels and patterns in the market, where swing point detection is one of the core concepts within ICT trading methodologies and teachings.



Swing points are automatically detected solely based on market movements, without any reliance on user-defined input.

🔹 Utilizing Swing Points

Swing points are not identified in real time as they occur. While short-term swing points may be displayed with a delay of at most one bar, the identification of intermediate and long-term swing points depends entirely on market movements. Furthermore, detection is not limited by any user-defined input but relies solely on pure price action. Consequently, swing points are not typically utilized in real-time trading scenarios.

Traders often analyze historical swing points to discern market trends and pinpoint potential entry and exit points for their trades. By identifying swing highs and lows, traders can:

• Recognize Trends: Swing highs and lows help traders identify the direction of the trend. Higher swing highs and higher swing lows indicate an uptrend, while lower swing highs and lower swing lows indicate a downtrend.
  
• Identify Support and Resistance Levels: Swing highs often serve as resistance levels, known in ICT terminology as Buyside Liquidity Levels, while swing lows function as support levels, also referred to in ICT terminology as Sellside Liquidity Levels. Traders can utilize these levels to strategize entry and exit points for their trades.
  
• Spot Reversal Patterns: Swing points can form various reversal patterns, such as double tops or bottoms, head and shoulders patterns, and triangles. Recognizing these patterns can signal potential trend reversals, allowing traders to adjust their strategies accordingly.
  
• Set Stop Loss and Take Profit Levels: In the context of ICT teachings, swing levels represent specific price levels where a concentration of buy or sell orders is anticipated. Traders can target these liquidity levels/pools to accumulate or distribute their positions, essentially using swing points to establish stop loss and take profit levels for their trades.
  

Overall, swing points provide valuable information about market dynamics and can assist traders in making more informed trading decisions.

🔶 SETTINGS

🔹 Structures

• Swings and Size: Toggles the visibility of the structure's highs and lows, assigns an icon corresponding to the structures, and controls the size of the icons.
  
• Market Structures: Toggles the visibility of the market structures.
  
• Market Structure Labels: Controls the visibility of labels that highlight the type of market structure.
  
• Line Style and Width: Customizes the style and width of the lines representing the market structure.
  
• Swing and Line Colors: Customizes colors for the icons representing highs and lows, and the lines and labels representing the market structure.
  

🔶 RELATED SCRIPTS

Market-Structures-(Intrabar).
Buyside-Sellside-Liquidity.