Dinapoli Levels (3 Reaction Points)

The Dinapoli Levels is a drawing tool that adds context to the Location in which a market is trading. It does so by drawing Fibonacci Nodes which form Confluence Areas and Agreement Areas that might condition future market moves. This is a Leading Indicator created by Joe DiNapoli.
This version enables you to draw a series of 3 Sets of Fibonacci Nodes in one go. Therefore, you will make use of this tool whenever you find a market swing with 3 clear Reaction Points.
All these terms will be clarified on the sections down below. Next, you’ll learn how to read this tool.

HOW TO READ THE DINAPOLI LEVELS
Firstly, let’s tackle the basic concepts. In the chart below you’ll see both a market Up Swing and a Down Swing. They both show 3 significant Reaction points, and therefore are suitable for this tool.
Here’s a Line Chart to highlight its specific points of interest.

• Reaction Points: They are the succession of reversal price points that happen within a market swing. In the case of an up swing, they are the higher lows that stand out. And in down swings, they are the lower highs that stand out.
  
• Focus Point: The Focus Point is the most extreme Price Point of the swing. In the case of an up swing, it’s the extreme high. In a down swing it’s the extreme low.
  

To use this tool effectively, it needs to be drawn over a market swing that has at least 3 Distinct Reaction Points.
On adding the tool to the chart, it will pop up a message asking the user to click 3 Reaction Points. For proper display, one would select the reaction points from the bottom up in an up swing, and for a down swing they would be selected in descending order.
The final point to be selected is the Focus Point. Then, it’ll display a Fibonacci tree-like structure containing multiple Fibonacci Nodes.
But first, let’s display a simple Fibonacci Node to define its component parts.
Here’s the meaning for each Fibonacci Node:

• F3: It’s the 38.2% Fibonacci Retracement Node. It’s called F3 because originally Fibonacci Nodes were expressed in fractional format. In this case, it’s the 3/8 Node.
  
• F4: It’s the 50% Fibonacci Retracement Node. It’s called F4 because its fractional expression is 4/8 Node.
  
• F5: It’s the 61.8% Fibonacci Retracement Node. It’s called F5 because its fractional expression is 5/8 Node.
  
• F8: It’s the 100% Fibonacci Retracement Node. It’s called F8 because its fractional expression is 8/8 Node.
  

By combining close Fibonacci Nodes, one can define Areas of Interest that might act as Support or Resistance, and that might be employed in a wide variety of setups to define entries, take profit levels and stop-loss price levels.
Here are the main Areas to be identified:

• Confluence: It’s a price range in which there’s convergence between an F3 Node and an F5 Node.
  
• Agreement: It’s the convergence between a Fibonacci Node and a Fibonacci Expansion level, also called Objective Point.
  

WHY WOULD YOU BE INTERESTED IN THIS INDICATOR?
This version of Dinapoli Levels has been designed to address the needs of dedicated traders. Let’s review its main features.

Display 3 sets of Fibonacci Levels in One Go!
This tool excels on consolidated trends because it allows the user to plot 3 sets of Fibonacci Levels at once. That happens to be really useful when focusing on the longer term view. It clearly identifies where the market is trading with regards to key Confluence and Agreement areas.

Keep your Chart Clean!
Disciplined traders keep their charts clean. One needs proper focus to trade in the zone.
Please check how the chart on the left looks compared to the one on the right. Both display exactly the same information. On the right it uses the DiNapoli Levels to print 3 sets of Fibonacci Nodes, whilst on the right it uses the standard Fibonacci Retracement.
The DiNapoli Levels use a tree-like view which contributes to a more minimalistic and comprehensive display of information. Moreover, placing the Fibonacci Nodes to the right of the price candles enhances its visibility. There are no lines crossing over the price candles. It’s just a better tool. It keeps your charts free of messy lines.

EACH MARKET IN ITS OWN CHART
This tool somehow enhances the functionality of a Fibonacci Retracement Drawing Tool. Being in nature a drawing tool, it has been developed as an indicator because that’s the only way it can be done at the present moment in this platform.
Therefore it’s recommended to structure Each Market in its Own Chart. Being coded as an indicator, this tool benefits by displaying over a chart dedicated to a single market.
If you trade on multiple markets, then it’s convenient to set up separate charts for each one. Otherwise, you would need to apply, delete and reapply the tool every time you shift markets.

SETTINGS
Now let’s dive into the settings of this indicator.
Focus and Reaction Points: This section contains the price points selected for each Reaction Point and the Focus Point. One is able to modify their values through here. If so, the indicator will redraw the Levels to match the updated price point.

Confluences: This section allows you to customize how the indicator will display Confluence Areas.

• Highlight Confluences: Switch on/off the Highlight of the Confluence Levels.
  
• Confluence Color: Select the color that will be used to highlight the confluence levels.
  
• Confluence Area (%): It defines how wide could be the range in which to search for confluences.
  
• Increase Thickness: It defines how much thicker the Confluence Levels. To keep them as thick as the normal levels simply turn it to 0 (zero).
  

1st to 5th Levels: Each of these sections allows you to customize the look of each Group of Dinapoli Levels.

• Enable/Disable Level: Each Level (F3, F4, F5 and F8) can be enabled or disabled.
  
• Level Color: Select the line color for that specific level.
  
• Id: Shows the label identifying the Level.
  
• Price: Shows the price value of the Level.
  
• Offset: Determines how far to the right will the group of DiNapoli Levels be located.
  
• Width: Sets the width of the horizontal lines that represent the Levels.
  
• Thickness: Sets the line thickness of the lines.