Dynamic S/R Breakout Strategy with Pine Script Code & 1:2 RR

Support and Resistance Breakout Strategy [algo_aakash] | Full Code Inside

Breakout strategies identify moments when an asset’s price escapes its typical trading range. This article introduces a practical Pine Script strategy combining automated support/resistance detection with logical entry/exit rules for systematic trading.

Dynamic Support and Resistance Detection

Our strategy uses swing highs/lows to plot dynamic barriers. Support forms at recent swing lows using the lowest low of 20 bars, while resistance uses the highest high of 20 bars. This dynamic approach adapts better to market volatility compared to static horizontal lines, providing responsive price thresholds.

Trading Rules and Risk Management

• Long entries trigger when price closes above resistance with confirmation candle
• Short entries activate on closes below support with confirmation
• 1:2 risk-reward ratio with 1% stop loss and 2% take profit
• Position sizing based on equity percentage for capital preservation

Execution and Validation

The strategy includes visual plot shapes for signals and implements pyramiding prevention. Backtesting parameters can adjust historical analysis depth. Traders should forward-test in different market conditions and modify risk parameters according to their account size and risk tolerance.

This systematic approach removes emotional trading by automating key decisions. While effective in trending markets, users should combine this with fundamental analysis and market context for optimal results. The included code provides customizable foundation for further refinement.

//@version=5
strategy("Support and Resistance Breakout Strategy [algo_aakash] | Full Code Inside", overlay=true, margin_long=100, margin_short=100)
// Author: algo_aakash

lookback = input.int(20, "Range Period")
stopLossPerc = input.float(1.0, "Stop Loss %")/100
takeProfitPerc = input.float(2.0, "Take Profit %")/100
tradeSize = input.float(2, "Position Size % of Equity")/100

support = ta.lowest(low, lookback)
resistance = ta.highest(high, lookback)

breakoutLong = close > resistance and high[1] < resistance[1]
breakoutShort = close < support and low[1] > support[1]

plot(support, color=color.green, linewidth=2)
plot(resistance, color=color.red, linewidth=2)

plotshape(breakoutLong, style=shape.triangleup, location=location.belowbar, color=color.green, size=size.small)
plotshape(breakoutShort, style=shape.triangledown, location=location.abovebar, color=color.red, size=size.small)

if breakoutLong
    strategy.entry("Long", strategy.long, qty=strategy.equity * tradeSize / close)
    strategy.exit("XL", "Long", stop=close*(1-stopLossPerc), limit=close*(1+takeProfitPerc))
    
if breakoutShort
    strategy.entry("Short", strategy.short, qty=strategy.equity * tradeSize / close)
    strategy.exit("XS", "Short", stop=close*(1+stopLossPerc), limit=close*(1-takeProfitPerc))