Indicator setup

Description of the "Setup Indicator"
Setup Indicator is a multifunctional trading tool that combines the power of a modified ATR indicator for trend determination and a classic ZigZag for identifying key market structures. It is designed to automatically detect reversal patterns "LL to HH" (bullish) and "HH to LL" (bearish), project target levels based on Fibonacci retracements, and visualize trading zones.


🎯 Philosophy and Utility
The indicator is built on the concept that significant price movements begin with the breakout of the previous structure (a higher low in an uptrend or a lower high in a downtrend). It helps the trader to:

- Objectively identify reversal points: Automatically detects "Lower Low -> Higher High" (LL->HH) formations for long positions and "Higher High -> Lower Low" (HH->LL) for short positions.

- Determine entry zones: Visualizes a "box" between key Fibonacci levels (38.2% and 60.6%), which serves as a potential area for trade entry.

- Project targets: Calculates and displays three target levels (0.84, 1.306, 1.618 for long and 0.16, -0.306, -0.618 for short) based on the magnitude of the initial impulse.

- Manage risk: Clearly marks the "structure break" level, upon reaching which the initial trading idea is invalidated.



⚙️ Operating Principle and Logic
1. ATR Trend (Base):

- Builds dynamic support and resistance levels based on the Average True Range (ATR) multiplied by a specified coefficient.

- Trend direction is determined by the position of the closing price relative to these levels. This is the main filter for the entire indicator.

2. ZigZag (Structure):

- Leaves only significant extremes (peaks and troughs) on the chart, filtering out market noise. The ZigZag length determines sensitivity.

3. Signal Filtering (The Heart of the System):

- A signal is considered valid only if it is confirmed by the ATR trend.

- For Long (LL to HH): The lower low (LL) must be formed in a downtrend according to the ATR, and the subsequent higher high (HH) — in an uptrend.

- For Short (HH to LL): The higher high (HH) must be formed in an uptrend according to the ATR, and the subsequent lower low (LL) — in a downtrend.

- This dual verification significantly improves signal quality.


🛠️ Indicator Settings
1. "ATR Trend Settings" Group
- ATR Period: Period for calculating the ATR. Smaller values make the trend more sensitive.

- Source: Price source used for calculation (default is hl2 - the average of High and Low).

- ATR Multiplier: Coefficient for expanding/narrowing the ATR bands. The higher the value, the less frequently the trend changes.

- Change ATR Calculation Method: Switches the ATR calculation between the standard method (ta.atr) and the SMA method (ta.sma(ta.tr)).

- Show ATR Support/Resistance Lines: Shows/hides the ATR trend lines on the chart.

2. "ZigZag Settings" Group
- ZigZag Length: Defines the minimum distance between extremes. Increase the value to find larger and more significant structures.

- Show ZigZag: Shows the ZigZag line.

- Show Only Current Structure (in the "Display Settings" group): A key setting. When enabled, the indicator removes all previous structures and displays only the most recent one, preventing chart clutter.

3. Visualization Settings
- Show Boxes: Shows the trading zone (between 38.2% and 60.6%).

- Box Length: The width of the box and all accompanying lines in bars.

- Show Targets: Shows the target lines and labels.

- Show Structure Break: Shows the structure break level line and label.

- Show HH/LL Labels: Shows "HH" and "LL" labels on the corresponding extremes.

- Show Connection Lines: Draws a line connecting the HH and LL extremes.



📊 Signal Interpretation
Bullish Signal (Long Setup)
1. Formation: A structure appears: LL (Lower Low), followed by HH (Higher High).

2. Visualization:

- Green Zone (Box): The area between 38.2% and 60.6% of the move from LL to HH. Considered as an area for entering long positions.

- Structure Break Level: The price level of the LL. A stop-loss is typically placed below this level.

- Targets: Three lines calculated based on Fibonacci extensions (0.84, 1.306, 1.618). Serve as potential take-profit levels.

Bearish Signal (Short Setup)
1. Formation: A structure appears: HH (Higher High), followed by LL (Lower Low).

2. Visualization:

- Red Zone (Box): The area between 38.2% and 60.6% of the move from HH to LL. Considered as an area for entering short positions.

- Structure Break Level: The price level of the HH. A stop-loss is typically placed above this level.

- Targets: Three lines calculated based on Fibonacci extensions (0.16, -0.306, -0.618).



⚡ Alerts
The indicator has built-in conditions for creating alerts in TradingView:

"LONG Signal" - Triggers when a bullish LL->HH structure appears.

"SHORT Signal" - Triggers when a bearish HH->LL structure appears.



💎 Conclusion and Usage Tips
Setup Indicator is not just an indicator, but a complete system for finding and trading structural reversals.

- For conservative traders: Use larger values for ZigZag Length and ATR Multiplier to find only the most significant and confirmed market moves.

- For active traders: Adjust the parameters for lower timeframes to find more trade setups.

- Always use the "Structure Break" level for risk management. This is an integral part of the system.

- Combine signals with the overall market context and support/resistance levels to increase the probability of success.

Disclaimer: This tool is intended to assist in analysis and is not a direct trading recommendation. All trading decisions are made independently and at your own risk.