Order Blocks

The Order Blocks indicator identifies institutional-level support and resistance zones by combining fractal pattern recognition with optional Fair Value Gap (FVG) filtering. This tool is designed to highlight areas where significant institutional orders were likely placed, resulting in market structure shifts and high-probability reversal zones.

Usage

The tool identifies bullish (OB+) and bearish (OB-) zones based on price action breaking fractal levels.

• Bullish Order Blocks (OB+): These appear when price breaks above a fractal high. The script marks the last bearish candle before the impulse move. Traders often look for long entries when price retraces to these zones.
• Bearish Order Blocks (OB-): These appear when price breaks below a fractal low. The script marks the last bullish candle before the move. Traders use these as potential resistance for short entries.
• FVG Filtering: When enabled, the indicator only displays order blocks that are accompanied by a market imbalance (Fair Value Gap). This increases the reliability of the zone by ensuring strong institutional momentum was present.
• Automatic Mitigation: To keep the chart clean, zones are automatically removed once price trades through them, signaling that the institutional interest at that level has been exhausted.

Details

The script utilizes a 5-bar fractal pattern to define local highs and lows. A market structure break is confirmed when the price closes beyond these fractal points. Once a break is detected, the script looks back within a user-defined range to find the "origin" candle of the move. For precision, the tool allows users to toggle between using candle bodies or full wicks to define the vertical boundaries of the boxes. It also includes an overlap prevention algorithm to ensure that multiple boxes don't clutter the same price area.

Settings

Bullish Order Block Settings

• Show Bullish Order Blocks: Toggles the visibility of bullish zones.
• Show OB+ Label: Displays the "OB+" text on the zone.
• Bullish OB Color / Border: Customizes the visual appearance of bullish zones.

Bearish Order Block Settings

• Show Bearish Order Blocks: Toggles the visibility of bearish zones.
• Show OB- Label: Displays the "OB-" text on the zone.
• Bearish OB Color / Border: Customizes the visual appearance of bearish zones.

FVG Settings

• Filter by FVG: Requires a Fair Value Gap to exist near the order block for it to be valid.
• Max Bars Between OB and FVG: Sets the maximum allowable distance between the order block candle and the detected imbalance.

General Settings

• Prevent Overlapping OBs: Ensures new zones do not overlap with existing active zones.
• Bars Back to Check: The lookback period for detecting candles and fractals.
• OB Height: Choice between "Body" or "Wick" for the box vertical range.
• Max Order Blocks to Display: Limits the number of active zones on the chart.
• Length of Boxes: Determines how far right the boxes extend on the chart.

FAQ

How do I access the Order Blocks indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Why do some order blocks disappear?

The indicator uses mitigation logic. When price breaks through the boundary of an order block (breaking the high of a bearish OB or the low of a bullish OB), the zone is considered mitigated and is removed from the chart.

What is the advantage of using FVG filtering?

Filtering by Fair Value Gaps ensures that the order block led to a significant market imbalance. This often indicates stronger institutional participation compared to moves that do not leave gaps behind.