Dynamic Reversal Zones & Swing Breakout Sequence

Dynamic Reversal Zones & Swing Breakout Sequence

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Discover the Power of the TDU Dynamic Reversal Zones & Swing Breakout Sequence Indicator

Every trader knows that markets move in waves—swinging from highs to lows and back again. The challenge is spotting the subtle clues when these swings transition into true breakouts and understanding how deeply price might retrace before resuming its journey. The TDU Swing Breakout Sequence & Dynamic Reversal Zones Indicator empowers you to see these critical structural elements in real-time, delivering a holistic toolkit that goes beyond mere swing points. With integrated Fibonacci retracements and Fair Value Gaps (FVGs), you not only identify emerging breakouts early but also gain a richer context for price action and potential value areas.

Elevate Your Trading With Integrated Market Structure Analysis
By mapping out key swing points (A, B, R, 1, 2, 3, 4, and optionally 5), the indicator reveals when price action is building towards a breakout. Add to that the Dynamic Reversal Zones, which highlight dynamic regions where price has a historical tendency to react, and you have a blueprint for understanding the market’s underlying behavior. The Fibonacci retracements within these Dynamic Reversal Zones guide you to precise levels of potential support and resistance—exactly where you can anticipate meaningful price responses. Meanwhile, spotting Fair Value Gaps gives you insight into where price may gravitate to fill in imbalances, delivering another dimension of tradeable signals.

 

Tutorials

Part 1 - Theory and Application

 

Part 2 - Manual Backtest

 

Part 3. Swing Breakout Sequence

Understanding the Dynamic Reversal Zones:
Dynamic Reversal Zones add another dimension to your swing analysis by automatically highlighting areas in the market where price has historically shown a tendency to react. These zones are derived from countertrend swings—movements that go against the prevailing direction—and visually present them as value-rich areas for potential pullbacks. By overlaying Fibonacci retracements onto these zones, you get a clearer picture of where price may halt or reverse as it retraces into the previous countertrend swing. This combination allows you to anticipate and trade pullbacks with greater accuracy, as you’ll recognize where the market might pivot, consolidate, or resume its dominant trend.

Key Benefits:

  • Clarity in Market Structure: Identify swing highs, lows, and critical pivot points with precision. No more guesswork—just a clear visual roadmap of where price may be headed.

  • Early Breakout Detection: Spot developing breakouts at critical swing points before the crowd, positioning yourself to capture powerful moves as they unfold.

  • Dynamic Reversal Zones with Fibonacci Retracements: Instantly visualize key “value areas” backed by historically reactive price levels. Pinpoint where shallow or deep retracements could occur, and prepare to engage the market at areas of highest confluence.

  • Fair Value Gaps (FVGs) Insights: Detect imbalances in price to anticipate where the market may fill in “gaps” of value. Use FVGs to confirm potential entries or exits, and refine your risk management by understanding where price is likely to seek equilibrium.

  • Strategy Integration: Use the output as a filter, trigger, or confirmation tool within your existing strategies—merge structural clarity, Dynamic Reversal Zones, and FVG detection with your preferred trading setups for a powerful edge.

  • Confidence in Execution: Equipped with a comprehensive visual map of swing patterns, retracement zones, and value gaps, you can trade with greater conviction. Reduce hesitation, maintain discipline, and allow the objective signals to guide your decisions.

Don’t settle for a fragmented view of the markets. Harness the TDU Swing Breakout Sequence & Dynamic Reversal Zones Indicator to unify swing analysis, retracements, and FVG insights into one cohesive framework—ensuring you never miss those critical turning points or undervalued opportunities again.

 

 

1. Swing Breakout Sequence Settings 

  • Swing Length 
    Defines how many bars are considered on each side of a potential pivot for confirming a swing high or low. A smaller number detects more frequent pivots, while a larger number focuses on broader, more reliable market swings.

  • Swing Breakout 
    Chooses which swing point the indicator uses to generate breakout signals. You can select from Swing 1, 2, 3, 4, or 5. For example, if you choose Swing 4, the indicator will mark a breakout when price crosses above (for bullish) or below (for bearish) the level of Point 4 in the sequence.

  • Show Point 5
    Determines if the indicator will attempt to plot a fifth swing point. Point 5 can add extra confirmation in certain patterns, especially useful for traders who value additional structure before calling a breakout.

  • Show Sequence Path
    If enabled, the indicator draws a line connecting all identified swing points, providing a visual “map” of the unfolding pattern.

  • Show Boxes
    When turned on, a box is drawn around the initial two swing points (A and B) to highlight the key price area that sets the stage for subsequent breakout points.

  • Show Lines
    Toggles horizontal reference lines at each identified swing point. These lines help you see exactly where price must break to confirm a bullish or bearish breakout.

  • Show Breakout Arrows
    Displays an arrow on the chart at the moment a breakout is confirmed. Arrows offer a clear visual cue that the market has crossed the chosen swing point threshold.

  • Enable Alerts 
    Turn this on to receive an audible alert when a breakout is detected. This is especially helpful if you step away from the screen or monitor multiple instruments.

  • Alert Sound 
    Select a custom WAV file for the audible alert. Choose a tone that suits your trading environment and ensures you won’t miss the breakout notification.

Note on Colors & Style:
The indicator also allows you to customize colors, fonts, and line styles. Adjust these to create a chart display that’s easy for you to read and interpret quickly.

 

2. Dynamic Reversal Zones settings

 

ZigZag type
Determines the method by which swing pivots are detected. Different types (e.g., ticks, points, percentage, ATR, swing) change how the indicator calculates when a high or low qualifies as a significant turning point.

Deviation (ticks)

Used when zigzag type is set to ticks
Specifies how far price must move in terms of a fixed number of ticks from a previous pivot before a new pivot is confirmed. Higher values require more movement, resulting in fewer pivots.

Deviation (points)
Used when zigzag type is set to points.
Specifies how far price must move in a fixed number of points from a previous pivot before a new pivot is confirmed. This is an absolute price measure and is often used for instruments where point-based measurements are more intuitive.

Deviation (%)
Used when zigzag type is set to percentage.
Specifies the required percentage change from a previous pivot before confirming a new pivot. This makes the pivot detection adaptive to current price levels, requiring a proportional move rather than a fixed amount.

ATR Period
Used when zigzag type is set to ATR.
Sets the lookback period for the Average True Range calculation. ATR is used when the ZigZag type is based on volatility. A longer period averages volatility over a greater number of bars, while a shorter period responds faster to recent volatility changes.

ATR multiplier
Used when zigzag type is set to ATR.
Multiplies the ATR value by this factor to determine how large a price move must be before confirming a pivot when using ATR-based thresholds. A larger multiplier requires a more substantial move, resulting in fewer pivots.

Swing Strength
Used when zigzag type is set to Swing.
Defines how many bars on either side of a potential swing point must be lower (for a swing high) or higher (for a swing low) before that point is considered a valid pivot. Increasing this value generally reduces the number of detected pivots, focusing only on more pronounced turning points.

Show Pivots
Enables or disables the display of identified swing highs and lows. When enabled, you can visually see the swing points on the chart.

Show Boxes
Enables or disables the display of identified Dynamic Reversal Zones—rectangular areas drawn between significant pivots. These zones highlight regions where price has historically shown interest.

Show fibonacci retracements
When enabled, draws horizontal Fibonacci retracement levels inside the identified Dynamic Reversal Zones. These levels help identify potential support or resistance areas within the zones.

Show fibonacci Price
When enabled, displays the exact price values corresponding to each Fibonacci retracement level. This provides a numerical reference point for the trader.

Show fibonacci Percentage
When enabled, displays the percentage values (e.g., 50%, 61.8%) of each Fibonacci retracement level. This helps traders recognize common retracement ratios at a glance.

Show Fair value gaps
Enables or disables the detection and display of fair value gaps—areas where price moved so quickly that it skipped certain price levels, potentially indicating zones where the market may later return to fill in missing liquidity.

Extend FVG until broken
When enabled, any detected fair value gap will be extended forward in time on the chart until current price action fills or breaks that gap. This helps keep track of areas where price might later return.

Show Paint Bars
When enabled, colors the price bars based on trend or other structural conditions determined by the indicator. This provides a visual cue to help interpret market direction or behavior directly from the bar display.

 

3. Strategy support


The TDU Swing Breakout Sequence Indicator doesn’t just paint a pretty picture—it also provides a Signal and DRZ plot that you can integrate into your strategies, third-party products like Algo Studio Pro, or tools like Bloodhound.

 This numeric output simplifies automation and further integration:

SBS Breakouts

  • When a bullish SBS breakout occurs at your chosen swing point, Signal = 1.
  • When a bearish SBSbreakout occurs at your chosen swing point, Signal = -1.
  • Otherwise, Signal = 0, indicating no breakout is in play.

 

DRZ first retest. 

The DRZ plot allows you to take action when price retests a DRZ zone for the first time. You can define the fib retracement percentage in the indicator settings

  • When price retests a previous DRZ then DRZ= 1. for a bullish direction
  • When the price retests a previous DRZ then DRZ= -1. for a bearish direction
  • Otherwise, DRZ= 0, indicating no breakout is in play.

This design allows you to easily incorporate the breakout logic directly into your algorithmic trading frameworks or custom strategy conditions. By leveraging the numeric signal, you can seamlessly combine structured swing logic with other indicators, filters, and rules to craft a robust, rules-based trading methodology.

 

Changelog

25-12-2024 v1.0.0.2

  • fixed DRZ plot not generating correct signals

 

 

 

 

 

 

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