🎯 Overview
What is a Trend Level Identifier?
The Trend Level Identifier is a powerful indicator that identifies and visualizes key trend levels (High, Mid, and Low) during market trends based on real-time calculations of highest, lowest, and mid-level values over a customizable lookback period.
Unlike static support and resistance indicators, the Trend Level Identifier dynamically adapts to current market structure, calculating trend strength by measuring the ratio of candles closing above or below the midline.
Why Use Trend Level Identifier?
- ✓ Dynamic Level Detection: Automatically calculates High, Mid, and Low based on recent price action
- ✓ Trend Strength Measurement: Real-time delta showing momentum strength
- ✓ Midline Retest Confirmation: Identifies key pullback opportunities
- ✓ Trend Shift Alerts: Signals when market direction changes
- ✓ Clean Visual Presentation: Three clear levels with trend strength display
- ✓ Multi-Market Application: Works on all timeframes and markets
🔧 How It Works - Technical Foundation
Three Key Levels Explained
High Level (Resistance):
Calculated as the highest price over the lookback period. Acts as dynamic resistance.
Mid Level (Balance Point):
Average of High and Low. Key level for trend strength measurement and retest opportunities.
Low Level (Support):
Calculated as the lowest price over the lookback period. Acts as dynamic support.
📈 Calculation Logic
Core Algorithm
Step 1: Calculate highest and lowest prices over specified length (default: 30 bars)
h = ta.highest(high, length)l = ta.lowest(low, length)
Step 2: Determine trend direction
- • If current high == highest value → Trend UP
- • If current low == lowest value → Trend DOWN
- • Otherwise → Continue previous trend
Step 3: Calculate midline
midline = (high + low) / 2
Step 4: Measure trend strength
Count candles closing above vs below midline, calculate delta percentage
📊 Trend Strength Meter
Strong Uptrend
Most candles closing above midline
Action: Look for long entries on pullbacks
Moderate Uptrend
More candles above than below midline
Action: Trend present but weakening
Neutral/Consolidation
Equal candles above and below
Action: Wait for breakout
Strong Downtrend
Most candles closing below midline
Action: Look for short entries on rallies
📊 Chart Example Analysis
Example 1: Uptrend with Midline Retest
Market Context: Nifty 50 in strong uptrend
Trend Strength: +82%
Interpretation: 82% of recent candles closed above midline = strong uptrend
Trade Setup: Wait for price to pullback to midline (24,050), then enter long if rejection occurs
Example 2: Downtrend with Midline Rejection
Market Context: Bank Nifty in bearish trend
Trend Strength: -78%
Interpretation: 78% of recent candles closed below midline = strong downtrend
Trade Setup: Wait for price to rally to midline (51,400), then enter short if rejection occurs
Example 3: Trend Shift Signal
Bullish to Bearish Trend Shift
Before Shift:
- • High: 78,800
- • Mid: 78,600
- • Low: 78,400
- • Trend Strength: +72% (Strong Uptrend)
⚠️ TREND SHIFT DETECTED
After Shift:
- • New High: 78,650
- • New Mid: 78,450
- • New Low: 78,250 ← Price made new low
- • Trend Strength: -15% (Trend Reversing)
⚠️ Trading Action:
1. Exit all long positions immediately
2. Wait for new trend levels to establish (minimum 5-10 bars)
3. If trend strength reaches -60% or below, consider short positions
4. Place stops above new High level
📈 Trading Strategy & Rules
🎯 Core Trading Principles
- Trade with Trend Direction: Only go long in uptrends (+60% or higher), short in downtrends (-60% or lower)
- Midline is Key: Best entries occur at midline retests with strong rejection
- Respect High/Low Levels: These are major support/resistance - expect reactions
- Trend Strength Confirms: Higher strength percentage = higher probability trades
- Wait for Shift Confirmation: After trend shift, wait for new levels to establish
📊 LONG Trade Setup
Entry Conditions
📉 SHORT Trade Setup
Entry Conditions
✅ Trading Checklist
Pre-Trade Analysis Checklist
- Levels Identified: High, Mid, and Low levels are clearly visible on chart
- Trend Strength Noted: Know the current trend strength percentage
- Trend Direction Clear: Understand if market is in uptrend or downtrend
- Lookback Period Appropriate: 30 bars for 15min charts, adjust for other timeframes
- No Recent Trend Shift: Levels have been stable for at least 10+ bars
- Multiple Timeframes Checked: Higher timeframe confirms same trend direction
- Market Session Active: Trading during liquid hours (10 AM - 2 PM IST for Indian markets)
Entry Confirmation Checklist
- Trend Strength Adequate: Minimum ±60% for trade consideration
- Price at Midline: Current price within 20 points of MID level
- Rejection Candle Formed: Strong candle closing away from midline
- Candle Body Size: Body is at least 60% of total candle range
- Close Confirms Direction: Candle closed above (long) or below (short) midline
- Volume Spike: Volume on rejection candle higher than 5-bar average
- No Conflicting Signals: No divergence on RSI or other momentum indicators
- Risk-Reward Acceptable: Target (HIGH/LOW) is at least 1:2 from entry to stop
Trade Management Checklist
- Stop Loss Set: Stop placed beyond HIGH (short) or LOW (long) level
- Position Size Calculated: Risk limited to 1-2% of capital
- First Target Defined: HIGH level (long) or LOW level (short)
- Breakeven Rule Active: Move stop to entry after 50% of target reached
- Trend Strength Monitoring: Watch for strength declining below ±40%
- Level Updates Tracked: Note when new High or Low levels form
- Trailing Stop Plan: Trail below new forming levels if trend continues
- Exit if Shift Occurs: Close position immediately if trend shift signal appears
Post-Trade Review Checklist
- Trade Logged: Entry, exit, levels, and trend strength recorded
- Trend Strength Accuracy: Did trend strength predict price movement correctly?
- Midline Retest Valid: Was the midline retest a clean rejection?
- Level Respect Analyzed: Did price respect HIGH/LOW levels as expected?
- Trend Shift Timing: If shift occurred, was it identified early enough?
- Mistakes Identified: Any entry/exit timing errors or rule violations?
- Improvement Notes: What would you do differently next time?
- Pattern Recognition: Does this outcome match previous similar setups?
💡 Practical Trading Examples
📈 Example 1: Nifty 50 Long on Midline Retest
Setup Details:
| Market: | Nifty 50 Index |
| Timeframe: | 15-minute chart |
| Lookback Period: | 30 bars (7.5 hours) |
Initial Levels:
- • HIGH: 24,180
- • MID: 24,080
- • LOW: 23,980
- • Trend Strength: +76%
Price Action:
- Price rallies from 24,050 to 24,165 (near HIGH)
- Natural pullback begins - profit taking
- Price declines to 24,075 (touches MID level)
- 15-min candle forms bullish hammer: Low 24,072, Close 24,095
- Volume: 850K (avg: 620K) = +37% volume spike
Trade Execution:
| Entry: | 24,098 (next candle open) |
| Stop Loss: | 23,955 (25 points below LOW) |
| Risk: | 143 points |
| Target 1: | 24,180 (HIGH level) = 82 points |
| Target 2: | 24,250 (new high forming) = 152 points |
| R:R Ratio: | 1:1.06 (Target 1) | 1:1.06 overall |
Outcome:
✓ SUCCESSFUL
Target 1 hit in 32 minutes. Moved stop to breakeven. Target 2 hit in 68 minutes.
Average profit: 117 points
Key Success Factors: Strong trend (+76%), clean midline retest, high volume confirmation
📉 Example 2: Bank Nifty Short on Midline Rejection
Setup Details:
| Market: | Bank Nifty Index |
| Timeframe: | 15-minute chart |
| Lookback Period: | 30 bars |
Initial Levels:
- • HIGH: 51,650
- • MID: 51,450
- • LOW: 51,250
- • Trend Strength: -71%
Price Action:
- Price drops from 51,480 to 51,285 (near LOW)
- Short covering bounce occurs
- Price rallies to 51,465 (15 points above MID)
- 15-min candle forms bearish shooting star: High 51,468, Close 51,438
- Volume: 1.1M (avg: 750K) = +47% volume spike
Trade Execution:
| Entry: | 51,435 (next candle open) |
| Stop Loss: | 51,680 (30 points above HIGH) |
| Risk: | 245 points |
| Target 1: | 51,250 (LOW level) = 185 points |
| Target 2: | 51,100 (extended) = 335 points |
| R:R Ratio: | 1:0.75 (Target 1) | 1:1.37 overall |
Outcome:
✓ SUCCESSFUL
Target 1 hit in 45 minutes. Target 2 hit in 95 minutes.
Average profit: 260 points
Key Success Factors: Very strong downtrend (-71%), shooting star rejection, exceptional volume
⚠️ Example 3: Failed Setup (Weak Trend Strength)
Setup Details:
- Market: Sensex
- HIGH: 78,800
- MID: 78,600
- LOW: 78,400
- Trend Strength: +38% ⚠️ TOO WEAK!
What Happened:
❌ WHY THIS TRADE SHOULD BE SKIPPED:
- Trend strength only +38% (need minimum ±60%)
- Price tested midline but had weak rejection (doji candle)
- Volume was below average (no confirmation)
- Price immediately broke below midline next candle
- Levels were constantly shifting (unstable trend)
Correct Decision: NO TRADE TAKEN
When trend strength is below ±60%, the market is in consolidation. Wait for a clear trend to establish before taking midline retest trades.
⚙️ Configuration & Settings
📊 Key Parameters
| Parameter | Default | Recommended Range | Purpose |
|---|---|---|---|
| Length (Lookback) | 30 bars | 20-50 bars | Determines how far back to calculate High/Low levels |
| Color Bars | Enabled | On/Off | Colors candles based on close relative to midline |
| Show Labels | Enabled | On/Off | Display HIGH/MID/LOW price labels on levels |
| Trend Strength Display | Enabled | On/Off | Show delta percentage in table/label |
🎯 Timeframe Optimization
5-Minute Scalping
Length: 20-25 bars
Why: Faster reaction to price changes
Best For: Quick intraday trades
15-Minute Intraday
Length: 30-35 bars
Why: Balanced responsiveness
Best For: Standard day trading
1-Hour Swing
Length: 35-45 bars
Why: Captures broader trends
Best For: Multi-day positions
Daily Position
Length: 40-50 bars
Why: Major trend identification
Best For: Long-term trades
🔧 Market-Specific Settings
| Market | Recommended Length | Key Notes |
|---|---|---|
| Nifty 50 | 30 bars (15min) | Standard setting works perfectly. Strong trend respect. |
| Bank Nifty | 25-28 bars (15min) | More volatile, slightly shorter length captures swings better |
| Stocks (Large Cap) | 35-40 bars (15min) | Less volatile than indices, longer length filters noise |
| Forex Majors | 30-35 bars (15min) | 24/7 market, standard settings work well |
| Crypto (BTC, ETH) | 20-25 bars (15min) | High volatility, shorter length captures quick moves |
| Commodities | 30-35 bars (15min) | Gold, Silver, Crude - standard settings effective |
🌟 Best Practices & Pro Tips
Professional Trader Guidelines
- Trend Strength Minimum: Never trade when strength is between -60% and +60% (consolidation zone)
- Midline is King: 80% of your trades should be midline retests, not breakouts
- Wait for Confirmation: Don't enter on first touch of midline, wait for rejection candle
- Multiple Timeframe Analysis: Always check one timeframe higher to confirm trend direction
- Level Stability Check: Ensure HIGH/LOW haven't shifted in last 10 bars before entering
- Volume Validates: Higher volume at midline retest = higher probability success
- Trend Shift Awareness: Exit ALL positions when trend shift signal appears
- Risk Management Priority: Stop beyond HIGH/LOW always, no exceptions
⚡ Advanced Techniques
1. Trend Strength Grading System
| ±80% or more | Grade A | Take all valid midline setups |
| ±70% to ±79% | Grade B | Take setups with volume confirmation |
| ±60% to ±69% | Grade C | Only take perfect setups (volume + strong candle) |
| Below ±60% | No Trade | Skip all setups, wait for trend |
2. Level Confluence Strategy
When Trend Level Identifier MID level aligns with:
- • Previous day's close/open = High probability zone
- • Round numbers (24,000, 51,500, etc.) = Psychological support/resistance
- • Fibonacci retracement (0.382, 0.5, 0.618) = Golden zone
- • VWAP or major EMA (50, 200) = Institutional interest
Action: These confluences increase probability to 75-85%
3. Candle Pattern Enhancement
Midline retests combined with:
- • Bullish Engulfing = Extremely strong long signal
- • Hammer / Inverted Hammer = Strong reversal at support
- • Shooting Star / Hanging Man = Strong reversal at resistance
- • Doji at midline = Wait for next candle confirmation
4. Position Sizing Based on Strength
- • Trend Strength ±80%+ = Use 100% of standard position size
- • Trend Strength ±70-79% = Use 75% of standard position size
- • Trend Strength ±60-69% = Use 50% of standard position size
- • Below ±60% = Zero position size (no trade)
🎯 Combining with Other Indicators
RSI Confluence
Long: Midline retest + RSI > 50
Short: Midline retest + RSI < 50
Adds momentum confirmation
Volume Profile
When MID level aligns with Volume POC
Indicates institutional interest zone
Higher probability retests
Fibonacci Levels
Draw Fib from LOW to HIGH
Check if MID aligns with 0.5 retracement
Natural balance point
Market Structure
Combine with BOS/CHoCH concepts
Trend Levels + Market Structure Shift
Ultimate confirmation setup
🚫 Common Mistakes to Avoid
Top 10 Critical Errors
- Trading Weak Trends: Entering trades when trend strength is below ±60%
- Ignoring Midline Rejections: Not waiting for candle confirmation at midline
- Stop Loss Inside Range: Placing stops between MID and HIGH/LOW instead of beyond levels
- Chasing Breakouts: Entering when price breaks HIGH/LOW without retest
- Not Adjusting for Timeframe: Using same 30-bar length on 5min and Daily charts
- Ignoring Trend Shifts: Holding positions after trend shift signal appears
- Overtrading Midline: Taking every midline touch without confirmation
- Forgetting Volume: Entering midline retests with below-average volume
- Wrong Direction Trades: Going long in downtrends or short in uptrends
- No Multi-Timeframe Check: Not confirming trend on higher timeframe
⚠️ Setup Quality Assessment
Before Taking Any Trade, Score Your Setup:
| Criteria | Points | Your Score |
|---|---|---|
| Trend Strength ±80% or higher | 3 points | ___ |
| Trend Strength ±70-79% | 2 points | ___ |
| Trend Strength ±60-69% | 1 point | ___ |
| Clean midline rejection candle | 2 points | ___ |
| Volume 30%+ above average | 2 points | ___ |
| Higher TF confirms trend | 2 points | ___ |
| Levels stable (10+ bars) | 1 point | ___ |
Scoring Guide:
- • 10-12 points: Excellent Setup - Take full position size
- • 7-9 points: Good Setup - Take 75% position size
- • 5-6 points: Average Setup - Take 50% position size or skip
- • Below 5: Poor Setup - DO NOT TRADE
⚡ Quick Reference Card
📈 LONG SETUP CHECKLIST
✓ Trend Strength +60% or higher
✓ Price pulls back to MID level
✓ Bullish rejection candle closes ABOVE midline
✓ Volume spike on rejection (30%+ above average)
✓ ENTRY: Next candle open
✓ STOP: 20-30 points BELOW LOW level
✓ TARGET: HIGH level, then trail
✓ EXIT: If trend shifts or strength drops below +40%
📉 SHORT SETUP CHECKLIST
✓ Trend Strength -60% or lower
✓ Price rallies up to MID level
✓ Bearish rejection candle closes BELOW midline
✓ Volume spike on rejection (30%+ above average)
✓ ENTRY: Next candle open
✓ STOP: 20-30 points ABOVE HIGH level
✓ TARGET: LOW level, then trail
✓ EXIT: If trend shifts or strength rises above -40%