Supply and Demand - Order Block - Candle Identification

The Supply and Demand - Order Block - Candle Identification indicator identifies and highlights the specific point of origin candles that precede a fractal structural break. By visually marking these order blocks, the tool helps traders identify high-probability supply and demand zones where price is likely to react upon a retest.

Usage

The indicator serves as a visual guide for identifying institutional footprints left behind during market shifts.

• Demand Zones: Created when price breaks above a recent high fractal. The script highlights the last down-candle (red candle) before the upward move that caused the break.
• Supply Zones: Created when price breaks below a recent low fractal. The script highlights the last up-candle (green candle) before the downward move that caused the break.
• Retests: Traders typically look for price to return to these highlighted boxes. Fresh zones (untested) generally offer a higher probability of a bounce, while zones tested multiple times are more likely to fail.
• Failed Zones: If a zone is breached, price may often retest that same area from the opposite side, transitioning from supply to demand or vice versa.

Details

The script utilizes a fractal-based logic to determine market structure. A fractal break signifies that the market has generated enough strength to surpass a significant turning point. This indicator specifically identifies the "Order Block"—the final candle of the opposite direction before that momentum shift—as the area where significant buying or selling interest originated.

The sensitivity of the indicator is governed by the "Periods" setting. A smaller period responds more quickly to minor structural shifts (creating more "noise"), while a larger period focuses on major structural pivots, identifying more significant zones.

Settings

• Change Box Colors?: When enabled, this allows the indicator to dynamically update the color of the zones based on whether price is currently trading above or below them.
• Fractal Break Type: Allows the user to choose between "Wick+Body" or "Body" only for confirming a break of a fractal level.
• Periods: Sets the number of bars used to calculate fractals. Higher values filter out minor fluctuations to show significant zones.
• Colors (Bg/Border): Customizable color inputs for both supply (bearish) and demand (bullish) zones to match your chart theme.

FAQ

How do I access Supply and Demand - Order Block - Candle Identification?

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

Which timeframe is best for this indicator?

While it works on all timeframes, the default settings are optimized for the 5-minute and 15-minute charts.

What does a color change in a zone signify?

A color change indicates that price has crossed through a previously established zone, potentially signaling a shift in the local supply/demand dynamic or a "breaker" scenario.