Lately I realized I had been looking at price action alone to identify SR levels, and sometimes I would miss the breakout, or more often than not, hit resistance that I did not realize would be there. So I decided to look at SR in a different light - volume absorption. I realized that SR often happens at price levels where high volume doesn't move price much.
I decided to write an indicator that tries to spot SR levels before PA confirms these levels. This indicator plots Volume per Tick of movement, an average of a capped series, and upper and lower standard deviations of the capped series.
When Volume/Tick is high, there is a battle going on in the market and a SR level might develop here. Due to the high volatility of Volume/Tick, I decided to add a standard deviation cap to this series, so an extreme number does not widen the standard deviation levels too much. This cap does not affect the Volume/Tick plot.
In this beta release, if volume/tick is outside the upper and lower limits, the indicator will extend a line 36 bars from the close of the bar. My goal is to store these levels and create SR "zones" when this high volume/tick happens happens multiple times. Any help in making this indicator better, or suggestions would be greatly appreciated.