The Strat - Levels [rdjxyz]

◆ OVERVIEW

The Strat - Levels dynamically displays key levels used in The Strat trading methodology, developed by Rob Smith. The level colors are dynamically determined by their Strat classification (1, 2 up, failed 2 up, 2 down, failed 2 down, 3)—making it easy to recognize higher timeframe Strat candle classifications from any lower timeframe.

◆ DETAILS

If you're unfamiliar with The Strat, there are 3 universal scenarios regarding candle behavior:

SCENARIO ONE

The 1 Bar - Inside Bar: A candle that doesn't take out the highs or the lows of the previous candle; aka consolidation.

SCENARIO TWO

The 2 Bar - Directional Bar: A candle that takes out one side of the previous candle; aka trending (or at least attempting to trend).

These can be broken down even further as follows:

• 2 Up: A candle that takes out the high of the previous candle and closes bullish
• Failed 2 Up: A candle that takes out the high of the previous candle and closes bearish
• 2 Down: A candle that takes out the low of the previous candle and closes bearish
• Failed 2 Down: A candle that takes out the low of the previous candle and closes bullish

SCENARIO THREE

The 3 Bar - Outside Bar: A candle that takes out both sides of the previous candle; aka broadening formation.

◇ HOW THE DYNAMIC LEVEL COLORING WORKS

PREVIOUS LEVELS

• Previous Day High/Low
  
• Previous Week High/Low
  
• Previous Month High/Low
  
• Previous Quarter High/Low
  
• Previous Year High/Low
  

Each period's levels are compared to their previous period's levels and colored according to the 3 universal scenarios, which are fixed based on historical data. (No repainting)

CURRENT LEVELS

• Current Day Open
  
• Current Week Open
  
• Current Month Open
  
• Current Quarter Open
  
• Current Year Open
  

Each current period's levels (high, low, and current price) are compared to the previous period's levels and current period's open on every tick—changing colors in real-time as their Strat classification changes. (Will repaint as price action evolves)

E.g. When a new day opens inside of the previous day's range (high/low) the Day Open line will be gray (default for inside bars). When the current day trades above the previous day's range, the Day Open line will become aqua (default for 2 up). If price trades back below the current day's open, the Day Open line will become fuchsia (default for failed 2 up). And if price trades below the previous day's range, the Day Open line will become dark purple (default for 3s).

◆ SETTINGS

• Current Day Open
  
• Previous Day High/Low
  
• Current Week Open
  
• Previous Week High/Low
  
• Current Month Open
  
• Previous Month High/Low
  
• Current Quarter Open
  
• Previous Quarter High/Low
  
• Current Year Open
  
• Previous Year High/Low
  
• Strat Colors
  

Each Current Level Open has 4 inputs:

1. Show/Hide Checkbox
   
2. Line Style ['solid', 'dashed', 'dotted']
   
3. Line Width ['1px', '2px', '3px', '4px']
   
4. Label Offset (Integer)
   

Each Previous Level High/Low has 5 inputs:

1. Show/Hide High Checkbox
   
2. Show/Hide Low Checkbox
   
3. Line Style ['solid', 'dashed', 'dotted']
   
4. Line Width ['1px', '2px', '3px', '4px']
   
5. Label Offset (Integer)
   

And each Strat scenario can be custom colored:

• 1-Bar Color - Default Gray
  
• 2-Up Color - Default Aqua
  
• Failed 2-Up Color - Default Fuchsia
  
• 2-Down Color - Default White
  
• Failed 2-Down Color - Default Teal
  
• 3-Bar Color - Default Dark Purple
  

◆ USAGE
There are 3 ways to look at these levels:

1. Potential continuation (e.g. Previous Day's 2-Up High being broken by Current Day's Price)
   
2. Potential reversal (e.g. Previous Day's 2-Down High being broken by Current Day's Price)
   
3. Potential exhaustion risk (e.g. Previous Month's Low is broken by Current Day's Price but trades back up into the Previous Month's range)
   

It's best to use this indicator with a separate indicator that color codes your chart's candles according to their Strat Scenario (1, 2, 3) and use top-down analysis to gauge whether to view levels as a sign of continuation, reversal, or exhaustion risk.

◆ WRAP UP

As demonstrated, The Strat - Levels offers Strat Scenario color-coded key levels, making it easy to identify the previous period's Strat Scenario (1, 2-Up, Failed 2-Up, 2-Down, Failed 2-Down, or 3) without needing to manually plot levels or refer to higher timeframes.

◆ DISCLAIMER

This indicator is a tool for visual analysis and is intended to assist traders who follow The Strat methodology. As with any trading methodology, there's no guarantee of profits; trading involves a high degree of risk and you could lose all of your invested capital. Use of this indicator is not indicative of future results and does not constitute and should not be construed as investment advice. All trading decisions and investments made by you are at your own discretion and risk. Under no circumstances shall the author be liable for any direct, indirect, or incidental damages. You should only risk capital you can afford to lose.