Simple Breakout Tool

How the Simple Breakout Tool Works

Here’s what we’re using in this indicator:

• Simple Moving Averages (SMA): We’ll use 10, 30, and 100-period SMAs to determine trend direction.
• Stochastic Slow Indicator: A tool to measure overbought and oversold levels, making it easy to spot potential reversals.
• MACD Histogram (MH): A momentum gauge to validate the strength of buy or sell signals.

Step-by-Step Code Breakdown

Step 1: Set Up Moving Averages

Start by defining the 10, 30, and 100-period SMAs, which form the basis of our trend analysis.

input fastSMALength = 10;

input mediumSMALength = 30;

input slowSMALength = 100;



def SMA10 = SimpleMovingAvg(close, fastSMALength);

def SMA30 = SimpleMovingAvg(close, mediumSMALength);

def SMA100 = SimpleMovingAvg(close, slowSMALength);

Step 2: Add Stochastic Slow Indicator

Next, we introduce the Stochastic Slow Indicator to pinpoint overbought and oversold zones.

def StoSloK = StochasticSlow(80,20,21,3).SlowK;

def StoSloD = StochasticSlow(80,20,21,3).SlowD;

def StoSloOB = StochasticSlow(80,20,21,3).Overbought;

def StoSloOS = StochasticSlow(80,20,21,3).Oversold;

Step 3: Define the MACD Histogram

The MACD Histogram is our momentum confirmation, helping filter out weaker signals.

def MH = MACDHistogram();

Step 4: Set Market Hours

We want to keep signals within regular trading hours, so we’ll limit the signals to 9:30 AM to 4:00 PM.

input startTime = 930;

input endTime = 1600;



def marketHours = if SecondsTillTime(startTime) <= 0 and SecondsTillTime(endTime) > 0 then 1 else 0;

Step 5: Create Buy and Sell Conditions

Now we’re ready to define the actual buy and sell conditions:

• Buy Signal: Triggers when the price crosses above the 10-period SMA, is above the 100-period SMA, and the Stochastic is not overbought.
• Sell Signal: Activates when the price crosses below the 10-period SMA, is under the 100-period SMA, and the Stochastic is not oversold.

plot bullish = if marketHours and (close > SMA10 and close[1] <= SMA10[1]) and (close > SMA100) and StoSloK < StoSloOB and StoSloD < StoSloOB and MH > 0 then 1 else 0;

plot bearish = if marketHours and (close < SMA10 and close[1] >= SMA10[1]) and (close < SMA100) and StoSloK > StoSloOS and StoSloD > StoSloOS and MH < 0 then 1 else 0;

Step 6: Add Arrows for Clarity

We’ll add arrows to make it clear where buy and sell signals occur. Bullish signals will display an upward arrow, and bearish signals will show a downward arrow.

bullish.SetPaintingStrategy(PaintingStrategy.Boolean_Arrow_Up);

bearish.SetPaintingStrategy(PaintingStrategy.Boolean_Arrow_Down);



bullish.SetLineWeight(5);

bearish.SetLineWeight(5);

Using the Simple Breakout Tool

With this setup, you get straightforward signals that you can use right on your charts. When you see a buy signal, consider entering a trade; when you see a sell signal, it might be time to exit. Use this tool on daily charts for swing trades or intraday charts for quicker trades. The goal here is simplicity: fewer, clearer signals to help you take action with confidence.

Take It Further

If you’re looking to take this to the next level, try combining the Simple Breakout Tool with our Volatility Box or Market Pulse Indicator—both available on our website. This gives you a more complete strategy, aligning your trades with market volatility and broader trends. Happy trading!