Order Block Zone Study + Confirmation

The Order Block Zone Study + Confirmation indicator marks high-probability support and resistance order-block zones while providing a confirmation engine to help traders distinguish between simple zone touches and reactive price action. It utilizes a multi-factor scoring model to grade zone quality based on displacement, market structure, and confluence, offering a systematic way to monitor institutional supply and demand levels.

Usage

The Usage section focuses on identifying key levels and interpreting the model's feedback to improve chart reading.

Zone Identification and Grading

The script automatically plots bullish (Support) and bearish (Resistance) boxes. Each zone is assigned a Grade (A++ to C) and a Model Rating (1–10).

• High-Grade Zones (A/A++): Indicate strong displacement and trend alignment.
• Fresh vs. Tested Status: "Fresh" zones have not been revisited by price and are considered higher probability, while "Tested" zones show that price has already interacted with the level.

Confirmation Engine

When price enters or approaches a zone, the indicator searches for supporting evidence. If the criteria are met, a triangle icon appears.

• Support Confirmation: Triggers when price is near a Support OB and bullish conditions (momentum, EMA alignment, or candle behavior) align.
• Resistance Confirmation: Triggers when price is near a Resistance OB and bearish conditions align.

Label Interpretation

Labels provide real-time statistics on the zone's "Observed" hit rate and "Edge." This data reflects how similar zones have performed historically on the current chart, helping users understand the statistical context of the level.

Details

The indicator’s internal logic is divided into two primary systems:

1. Zone Construction and Scoring

The script identifies the last opposite candle before a displacement move. The quality of this zone is determined by:

• Displacement: Measured via ATR to ensure the move out of the zone was impulsive.
• Confluence: Checks if the zone aligns with the EMA trend, Premium/Discount zones (midpoint of recent range), and Pivot S/R levels.
• Market Bias: Adjusts scores based on whether the current market structure is bullish or bearish.

2. Observation Model

The script tracks historical zones to calculate an "Observed Rate." This is a combination of the Touch Rate (how often price returns to the zone) and the Target Rate (how often price reaches a projected ATR target before hitting an invalidation point). This data is adjusted by a Confidence factor based on the available sample size.

Settings

Main Settings

• Swing detection length: Controls the lookback for identifying swing highs and lows for zone creation.
• Source candle lookback: Sets how far the script searches for the origin candle of an order block.
• Displacement multiplier (ATR): The minimum impulse strength required to validate an order block.
• Minimum OB score: The threshold a zone must meet to be displayed or trigger alerts.
• Show historical zones: Toggles the visibility of invalidated or broken zones for context.

OB Rating

• Origin/Location/Reaction weights: Adjusts how much weight displacement, location (S/R, P/D), and initial price reaction contribute to the final 1-10 rating.

Confirmation Add-On

• Support/Resistance min hits: The number of internal confirmation conditions (RSI, MACD, EMA, etc.) that must pass to trigger a signal.
• Confirmation window: Defines how many bars after the initial touch the confirmation remains valid.
• Near zone distance (ATR): Defines how close price must be to the box to activate the confirmation logic.

FAQ

How do I interpret the Model Rating? The rating (1–10) combines the zone's structural quality, its current status, and its historical performance. Ratings between 8 and 10 indicate high-quality zones with strong historical edge, while ratings below 4 indicate low-probability setups.

What does the "Observed" percentage mean? This is a chart-specific calculation showing how often zones of that type have reached their ATR-based target relative to how many times they were touched. It provides context on the current symbol's behavior at order blocks.

How can I access the Order Block Zone Study + Confirmation? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.