The Price Magnets is now available for purchase on NinjaTrader in addition to TradeStation and MultiCharts.
Arps Price Magnets™
One of the most effective tools to generate support/resistance levels is the Arps Price Magnets TM Up/Down set of indicators.
These indicators are based on a revolutionary new concept developed to define price projection zones based on price swing analysis. The indicator is fully automatic and plots on the price chart a pair of horizontal lines, in the form of colored crosses, which define the upper and lower boundaries of a Price Magnets support/resistance zone. The width of the zone is determined by the price patterns generated by the previous swings.
The Arps Price Magnets Up indicator projects resistance zones above the market and Arps Price Magnets Down projects support zones below the market. Over 75% of the time, these Price Magnets will draw the prices to them and provide resistance/support when the prices reach them. On those occasions where prices do not stop and reverse at the Price Magnets but trade on through them, the price movement usually continues with increased strength, while the Price Magnet resistance levels become support levels and support levels become resistance levels.
If a new swing pattern is detected which qualifies as a Arps Price Magnet swing, a revised Arps Price Magnet target zone is calculated and plotted on the price chart. A specific Arps Price Magnet line continues to be plotted on the chart until either (1) the price reaches the Arps Price Magnet target, or (2) a new Arps Price Magnet swing pattern is detected which establishes a new Arps Price Magnet target zone.
THE ESTABLISHMENT OF A NEW PRICE MAGNET TARGET ZONE DOES NOT NECESSARILY DISQUALIFY THE EARLIER ZONE.
The Arps Price Magnets indicator has two controllable inputs: STRENGTH and LOOKBACK.
STRENGTH defines the magnitude of the swings to be used in establishing the Price Magnet targets, and therefore the sensitivity of the Price Magnets indicator. The term, “Strength”defines a Pivot high as a high which is higher than “STRENGTH” bars on either side of it. A swing high with a strength of 3, for example, is defined as a bar whose high is higher than the highs of the three bars preceding it and the highs of the three bars after it.
LOOKBACK defines the interval (in number of bars) over which the indicator will search for the price swing pattern which will define the target zone. The total number of bars loaded into the chart should be greater than twice the value ofLOOKBACK. Normally a little experimentation will be necessary to establish the optimum values for STRENGTH and LOOKBACK for each chart window. The default LOOKBACK value is set for 70 bars, but if you have a daily or weekly chart with less than 140 bars, you will have to reduce the LOOKBACK size.
Typical values for STRENGTH range from 1 to 5, with the higher numbers causing the Price Magnets to identify the more significant price targets. Some users prefer to run the Price Magnets indicator more than once on the same chart using different STRENGTH values and different colors for the target lines in order to see both the major and minor price targets.
As you watch the Arps Price Magnet zones develop in real time on your charts, you will be amazed at the uncanny way they draw the price to them.In downtrending markets, you will often see a stair step effect as the Price Magnet Up target lines follow the trend down. In this situation, the first time you see a Price Magnet target zone being drawn at a price level higher than the previous one which was on a stair step down, prices are usually ready to turn and this new Price Magnet zone is often penetrated with increasing momentum. A similar comparable can be seen in uptrending markets.
The Arps Price Magnets Up indicator projects resistance zones above the market and Arps Price Magnets Down projects support zones below the market. Over 75% of the time, these Arps Price Magnets will draw the prices to them and provide resistance/support when the prices reach them. On those occasions where prices do not stop and reverse at the Arps Price Magnets but trade on through them, the price movement usually continues with increased strength, while the Arps Price Magnet resistance levels become support levels and support levels become resistance levels.
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