TCP DMI

TCP DMI - Advanced Technical Indicator

This advanced DMI (Directional Movement Index) indicator enhances the traditional DMI by adding intelligent dynamic support and resistance levels based on historical price action analysis.

KEY FEATURES:

1. Standard DMI Components:
- DI+ (Directional Indicator Positive): Measures upward price movement
- DI- (Directional Indicator Negative): Measures downward price movement
- ADX (Average Directional Index): Measures trend strength
- Middle line at 20 for reference

2. Dynamic Support & Resistance Levels:
The indicator automatically identifies the most significant support and resistance levels by analyzing the last 400 candles (customizable) and detecting where DI lines have been rejected most frequently.

TWO TIERS OF LEVELS:

A) Normal Levels (Solid Lines):
- Support: Below 15
- Resistance: Above 25
- Style: Solid lines with 60% transparency
- These represent moderate support/resistance zones

B) Strong Levels (Dashed Lines):
- Strong Support: Below 10
- Strong Resistance: Above 30
- Style: Dashed lines with 40% transparency (more visible)
- These represent critical support/resistance zones

3. Intelligent Display Logic:
- When DI is ABOVE 20: Shows resistance levels (where price might face selling pressure)
- When DI is BELOW 20: Shows support levels (where price might find buying support)
- Each DI line (+ and -) has its own color-coded support/resistance levels for easy identification

4. Color Coding:
- DI+ levels use GREEN (customizable)
- DI- levels use RED/ORANGE (customizable)
- Support/Resistance lines match their respective DI colors but with reduced opacity
- This makes it instantly clear which DI the support/resistance belongs to

5. Rejection Detection Algorithm:
The indicator scans historical data to find peaks and troughs at specific levels, counting how many times price was rejected at each level. The level with the most rejections becomes the displayed support or resistance.

CUSTOMIZABLE PARAMETERS:

- ADX Smoothing: Default 14
- DI Length: Default 14
- Lookback Period: 400 candles (range: 50-500)
- Line Length: 15 candles forward + 15 candles back = 30 candle span
- DI+ Color: Customizable (default green)
- DI- Color: Customizable (default red)
- ADX Color: Customizable (default blue)
- Normal S/R Transparency: Default 60%
- Strong S/R Transparency: Default 40%

HOW TO USE:

1. Trend Identification:
- When DI+ crosses above DI-: Potential uptrend
- When DI- crosses above DI+: Potential downtrend
- ADX above 25: Strong trend
- ADX below 20: Weak trend or ranging market

2. Support/Resistance Trading:
- Watch for price reaction when DI approaches displayed support/resistance levels
- Solid lines = moderate levels
- Dashed lines = strong levels (more significant)
- The more rejections at a level, the more significant it becomes

3. Entry/Exit Signals:
- Entry: When DI bounces off support (below 20) or resistance (above 20)
- Exit: When DI breaks through major support/resistance levels
- Strong levels (dashed) are more reliable for major decisions

ADVANTAGES:

✓ Reduces chart clutter by only showing relevant levels based on current DI position
✓ Automatically adapts to changing market conditions
✓ Color-coded for instant visual recognition
✓ Two-tier system helps prioritize trading decisions
✓ Historical rejection analysis provides data-backed levels
✓ Fully customizable to match any trading style

BEST USED FOR:

- Swing trading
- Trend following
- Support/resistance trading strategies
- Identifying potential reversal zones
- Confirming breakout validity
- Risk management (stop-loss placement)

This indicator combines the power of traditional DMI with smart support/resistance detection, giving traders a comprehensive tool for technical analysis without overwhelming the chart with excessive information.