Drop Zone Scanner

DropZoneScanner.pinescript

// This Pine Script® code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © ExploiTR

//@version=6
indicator("Drop Zone Highlighter", overlay=true)

// --- User Inputs ---
var group_inputs = "Settings"
var float drop_threshold_input = input.float(1.5, title="Drop Threshold (%)", minval=0.01, step=0.1, group=group_inputs) / 100.0
var float gain_threshold_input = input.float(1.0, title="Gain Threshold (%)", minval=0.01, step=0.1, group=group_inputs) / 100.0
var color box_bg_color_input   = input.color(color.new(color.red, 85), title="Box Fill Color", group=group_inputs, inline="boxcolors")
var color box_border_color_input = input.color(color.new(color.red, 50), title="Box Border Color", group=group_inputs, inline="boxcolors")

// --- State Variables ---
// These variables maintain their values across bars.
var bool  s_in_drop_zone = false           // True if we are currently in a drop zone
var int   s_box_start_bar_index = na       // Bar index where the drop zone started
var float s_price_at_drop_trigger = na     // The high price from which the drop was measured (top of the box)
var float s_lowest_price_in_zone = na      // The lowest price recorded during the current drop zone (bottom of the box)

// Tracks the highest price observed since the last drop zone ended or since the script began.
var float s_high_since_last_event = high   // Initialized with the high of the first bar

// --- Main Logic (executes on each bar) ---
if not s_in_drop_zone
    // --- State: Not in a Drop Zone ---
    // Check if the price has dropped significantly from the last recorded high (s_high_since_last_event).
    // A drop is considered significant if the current close is below s_high_since_last_event by more than the drop_threshold_input.
    if close < s_high_since_last_event * (1 - drop_threshold_input)
        // Drop condition met: Transition to 'in_drop_zone' state.
        s_in_drop_zone := true
        s_box_start_bar_index := bar_index                // Mark the start bar of the box.
        s_price_at_drop_trigger := s_high_since_last_event // The top of the box will be this high.
        s_lowest_price_in_zone := low                     // Initialize the lowest price in this new zone with the current bar's low.
    else
        // No drop condition met: Update s_high_since_last_event if a new high is made.
        // This ensures s_high_since_last_event always holds the peak since the last zone ended or the script started.
        s_high_since_last_event := math.max(s_high_since_last_event, high)
else
    // --- State: Currently in a Drop Zone ---
    // Update the lowest price encountered so far in this zone.
    s_lowest_price_in_zone := math.min(s_lowest_price_in_zone, low)

    // Check if the price has gained sufficiently from the lowest point (s_lowest_price_in_zone) of the current drop zone.
    // A gain is considered significant if the current close is above s_lowest_price_in_zone by more than gain_threshold_input.
    if close > s_lowest_price_in_zone * (1 + gain_threshold_input)
        // Gain condition met: The drop zone ends. Draw the box.
        box.new(left = s_box_start_bar_index, top = s_price_at_drop_trigger,  right = bar_index, bottom = s_lowest_price_in_zone,bgcolor = box_bg_color_input, border_color = box_border_color_input)

        // Reset state variables to exit 'in_drop_zone' state and prepare for the next cycle.
        s_in_drop_zone := false
        s_high_since_last_event := high // Reset the high tracking, starting from the current bar's high.
        
        // Explicitly reset other state variables for clarity (they are re-assigned when a new zone starts).
        s_box_start_bar_index := na
        s_price_at_drop_trigger := na
        s_lowest_price_in_zone := na

// Safety check: Ensure s_high_since_last_event has a valid value.
// Given the initialization `var float s_high_since_last_event = high`, this is mostly a safeguard.
if na(s_high_since_last_event)
    s_high_since_last_event := high