Lossless Algorithms
The following is an algorithm I wrote for generating support/resist in trading with no thresholds or parameters. On each price move, the price range traveled loses a point in score. The resulting score of any price range is its support/resist strength, which declines the more it is traveled across (zero being strongest and untraveled). Visually, the price line looks like a long horizontal eraser scrubbing away on a chalkboard; price ranges least scrubbed thin out to support/resist lines. The reason I call it a "lossless" algorithm is because it doesn't estimate anything or use any seeded values/thresholds. It is analogous to lossless audio/image file formats. There is no sampling or use of statistics, just a 1-to-1 map of where price moves most and least freely. It is also extremely light both in computation and space because all you're doing is a single subtraction per datapoint and the max number of ranges to keep score of is the granularity...[More]
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