RBR/DBD
This script is used to identify market structures, specifically RBR (rally base rally) and DBD (drop base drop) structures.
A rally base rally structure indicates that the market has created a demand zone (can be interpreted as a support) while a drop base drop structure indicates that the market has created a supply zone (can be interpreted as resistance). While RBRs and DBDs can be found on literally any timeframe, like with anything chart-related, the lower the timeframe, the more noise and/or the weaker the sentiment. In other words, try to stick to longer timeframes such as 4H, 1D, 1W because anything lower, while may end up being valid, can have a relatively high probability of not being tradeable.
So how can you trade these market structures? Very simply to be quite honest. Once a demand or support zone is identified, simply wait for price to enter the zone and confirmation that the zone didn't break and enter either a long position or short position. Keep in mind that when a demand zone or support zone breaks, it can no longer be treated as a regular RBR/DBD; however, what's interesting is that you will find that even broken demand/support zones continue to be key levels.
Let's look at an example below:
Currently, the script will show zones as a single zone that changes over time. For example, if a RBR is identified today and then another one identified the next day, you'll see how the blue shaded area will shift to only reflect the most recent. This does not mean that the RBR identified previously is not valid. It is on the to-do list to change this behavior so that each RBR is distinct and separate.
TO-DO:
A rally base rally structure indicates that the market has created a demand zone (can be interpreted as a support) while a drop base drop structure indicates that the market has created a supply zone (can be interpreted as resistance). While RBRs and DBDs can be found on literally any timeframe, like with anything chart-related, the lower the timeframe, the more noise and/or the weaker the sentiment. In other words, try to stick to longer timeframes such as 4H, 1D, 1W because anything lower, while may end up being valid, can have a relatively high probability of not being tradeable.
So how can you trade these market structures? Very simply to be quite honest. Once a demand or support zone is identified, simply wait for price to enter the zone and confirmation that the zone didn't break and enter either a long position or short position. Keep in mind that when a demand zone or support zone breaks, it can no longer be treated as a regular RBR/DBD; however, what's interesting is that you will find that even broken demand/support zones continue to be key levels.
Let's look at an example below:
- A demand zone was found, as indicated by the "D" label as well as the blue shaded area.
- In rectangle 1, price comes into the demand zone and holds around the 212 area. Price then proceeded to the 218 area in the following days.
- In rectangle 2, price comes into demand again, and even though the wicks cross through the demand zone identified, the body does not break the zone. Price holds within the demand zone and then proceeds to :rocket: :rocket: :rocket:. Keep in mind though that the more demand zones are touched, the weaker that demand zone becomes. Same with supply zones.
- In rectangle 3, price finally breaks through the demand zone and so this can no longer be treated as a regular RBR anymore; however, notice how price struggles to get back over the old RBR.
Currently, the script will show zones as a single zone that changes over time. For example, if a RBR is identified today and then another one identified the next day, you'll see how the blue shaded area will shift to only reflect the most recent. This does not mean that the RBR identified previously is not valid. It is on the to-do list to change this behavior so that each RBR is distinct and separate.
TO-DO:
- Make each RBR/DBD separate and unique from each other
- Option to remove broken demand and supply zones
- More robust identification of RBR/DBD
- Add alert conditions when a RBR/DBD is identified
Versionsinformation:
Slight tweaks to RBR/DBD identification logic
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Bug fix.
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Updating structure identification logic and visuals.
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Added alert conditions. Alert conditions are set in a way that they will only fire if price nears a demand/supply zone.
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Updated to persist S/D zones
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Added in experimental DBRs and RBDs.
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Small update
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Multi-time frame zones. Color customization.
TODO: RBD / DBR
TODO: RBD / DBR
Versionsinformation:
Changed default settings