DC Swing Extension Pullback

The DC Swing Extension Pullback indicator is designed to trade within the validated range of a prior swing, ensuring signals occur in structured price action rather than random movements. By identifying swing extensions based on Donchian Channel levels, the indicator validates them using bar count, ATR multiples, and range percentage criteria.

Once a swing meets the criteria, it becomes a valid trading range, and the indicator monitors pullbacks within this range. When price creates a new extreme in the pullback and pauses, the indicator signals a potential breakout opportunity. This approach helps traders focus on continuation setups within structured price movements while avoiding low-quality range-bound trades.

Key Features

• Trade Within Prior Swing Range – Ensures all trades occur inside the validated swing range for better structure.
• Swing Extension Validation – Uses Donchian Channel, ATR multiples, and range comparisons to define high-probability swings.
• Pullback-Based Entries – Tracks retracements within the swing range to identify continuation setups.
• Breakout Pause Signal – Signals when a pullback creates a new extreme and pauses, offering a potential breakout trade.
• Swing Validity Control – Traders can define how long a swing remains a valid trading range before expiration.
• Break Validation Option – Choose whether a break beyond the range invalidates the swing or if the range remains valid.
• Customizable Parameters – Adjust filtering using ATR, tick size, bar count, and range-based conditions.

Tips for Implementation

• Trade Within Structure – Use the validated swing range to ensure trades occur within meaningful price zones.
• Optimize Pullback Entry – Adjust Min/Max Pullback Range Percent to ensure entries happen in logical retracement areas.
• Fine-Tune Swing Validity – Modify Swing Validity Bars to control how long a prior swing remains tradable.
• Confirm Momentum – Use additional indicators (e.g., RSI, MACD) to confirm trend strength before breakout entries.
• Backtest for Optimization – Test different timeframes and market conditions to optimize the best pullback settings.

001 Swing Creation Parameters

DC Period

• Type: Integer
• Description: Defines the lookback period for the Donchian Channel, which determines the swing extension levels.
• Range: 1 to infinity
• Default Value: 10

Min Extension Bars

• Type: Integer
• Description: The minimum number of bars required for a valid swing extension. Ensures sufficient price action for structural validity.
• Range: 1 to infinity
• Default Value: 40

Max Extension Bars

• Type: Integer
• Description: The maximum number of bars allowed for a valid swing extension. Helps prevent extended formations from being considered as swings.
• Range: 1 to infinity
• Default Value: 100

Min Extension Ticks

• Type: Integer
• Description: The minimum price movement in ticks required for a valid swing extension. Helps filter out minor price fluctuations.
• Range: 1 to infinity
• Default Value: 100

Max Extension Ticks

• Type: Integer
• Description: The maximum price movement in ticks allowed for a valid swing extension. Ensures extensions do not become excessively large.
• Range: 1 to infinity
• Default Value: 1000

Extension Min Swing Percent

• Type: Integer
• Description: The minimum percentage of the full swing required for an extension to be valid. Prevents small extensions from triggering signals.
• Range: 1 to 100
• Default Value: 60

Extension Max Swing Percent

• Type: Integer
• Description: The maximum percentage of the full swing that an extension can be. Avoids excessively large swing extensions.
• Range: 1 to 100
• Default Value: 100

Min ATR Multiple

• Type: Integer
• Description: The minimum multiple of the ATR (Average True Range) required for validating a swing extension. Helps filter out weak extensions.
• Range: 1 to infinity
• Default Value: 3

Max ATR Multiple

• Type: Integer
• Description: The maximum multiple of the ATR value allowed for a swing extension. Ensures that extensions remain within reasonable volatility conditions.
• Range: 1 to infinity
• Default Value: 20

Min Range Percent

• Type: Integer
• Description: The minimum percentage of the swing extension relative to the current Donchian Channel range.
• Range: 0 to 100
• Default Value: 0

Min Current Day Range Percent

• Type: Integer
• Description: The minimum percentage of the swing extension relative to the current day's price range.
• Range: 0 to 100
• Default Value: 0

ATR Period

• Type: Integer
• Description: Defines the lookback period for ATR (Average True Range) calculation, which helps measure market volatility.
• Range: 1 to infinity
• Default Value: 20

Range DC Period

• Type: Integer
• Description: Defines the lookback period for the Donchian Channel used in range calculations.
• Range: 1 to infinity
• Default Value: 100

002 Swing Validity Parameters

Swing Validity Bars

• Type: Integer
• Description: The number of bars for which a validated swing remains active, during which signals can be generated within its range.
• Range: 1 to infinity
• Default Value: 200

Invalidate Swing on Break

• Type: Boolean
• Description: If true, the swing becomes invalid when the price moves beyond its range. If false, the swing remains valid even if the price temporarily exceeds its boundaries.
• Options: true (Invalidate on break), false (Keep swing valid)
• Default Value: false

003 Signal Parameters

Min Pause Bars

• Type: Integer
• Description: The minimum number of consecutive bars required for a pause before confirming a signal.
• Range: 1 to infinity
• Default Value: 1

Max Pause Bars

• Type: Integer
• Description: The maximum number of consecutive bars allowed for a pause before confirming a signal.
• Range: 1 to infinity
• Default Value: 10

Min Pullback Range Percent

• Type: Integer
• Description: The minimum percentage of the prior swing where the pullback must occur for a valid signal.
• Range: 0 to 100
• Default Value: 20

Max Pullback Range Percent

• Type: Integer
• Description: The maximum percentage of the prior swing where the pullback can occur for a valid signal.
• Range: 0 to 100
• Default Value: 80

Plot Offset (Ticks)

• Type: Integer
• Description: Determines the number of ticks away from the high or low of the bar where signals are plotted. This offset visually separates the indicator’s signals from the price action, preventing overlap and improving clarity.
• Range: 1 to infinity
• Default Value: 5 ticks

IndicatorSignalUp

• Type: Plot
• Style: Triangle Up
• Color: DeepSkyBlue
• Description: This plot appears below the price bar that closes within the valid swing range, signaling a bullish breakout pause signal. The position is adjusted based on the Plot Offset to enhance visibility on the chart.

SignalUpUpperLevel

• Type: Plot
• Style: Hash
• Color: DeepSkyBlue
• Description: Represents the upper boundary of the valid bullish signal range. Helps define the maximum level for pullback-based entries.

SignalUpLowerLevel

• Type: Plot
• Style: Hash
• Color: DeepSkyBlue
• Description: Represents the lower boundary of the valid bullish signal range. Ensures that signals occur inside the prior swing range.

IndicatorSignalDown

• Type: Plot
• Style: Triangle Down
• Color: DeepSkyBlue
• Description: This plot appears above the price bar that closes within the valid swing range, signaling a bearish breakout pause signal. The position is adjusted based on the Plot Offset to enhance visibility on the chart.

SignalDownUpperLevel

• Type: Plot
• Style: Hash
• Color: DeepSkyBlue
• Description: Represents the upper boundary of the valid bearish signal range. Ensures pullback-based signals align within the prior swing range.

SignalDownLowerLevel

• Type: Plot
• Style: Hash
• Color: DeepSkyBlue
• Description: Represents the lower boundary of the valid bearish signal range. Helps define the minimum level for pullback-based entries.