chrysopoetics

Anchor Zones

L.A. Little, who wrote two books on trend trading, explained a key timing concept called anchor zones which was used, within his trading system, to enter and exit the market at appropriate times.

Anchor zones are formed from anchor bars. An anchor bar is a bar that has one or more of these components: wide range, high volume or gaps. For this script we're going to require two or more of the components. When an anchor bar forms, we'll note the high and low of the bar and draw a zone across time as prices develops. For this script, we'll also note the open and close of the candle to hint at other levels of support or resistance. The boundaries of these zones can act as support or resistance, but they also mark out the areas where price can often get trapped.

A breakout from these zones on high volume can suggest the beginning of a new trend. In general, anchor zones are a good compliment to price action strategies. For more information on how to use these, refer to L.A. Little's books.

References

https://onlinelibrary.wiley.com/doi/10.1...
https://www.tradingsetupsreview.com/anch...

Want to Learn?

If you'd like the opportunity to learn Pine but you have difficulty finding resources to guide you, take a look at this rudimentary list: https://docs.google.com/document/d/10t3Z...

The list will be updated in the future as more people share the resources that have helped, or continue to help, them. Follow me on Twitter to keep up-to-date with the growing list of resources.

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