Order Blocks

The Order Blocks indicator identifies institutional supply and demand zones by analyzing candlestick patterns and market structure shifts in real-time. This tool automates the detection of significant price levels where large orders were previously executed, providing traders with visual zones for potential trend reversals or continuations.

Usage

The Usage section describes how the script can be used to identify key market areas. Order blocks are automatically drawn when the script detects a break in market structure. A bullish order block is formed when a bearish candle is followed by a significant move upward that breaks a previous high, while a bearish order block is formed when a bullish candle is followed by a sharp move downward that breaks a previous low.

These blocks remain on the chart until they are "mitigated" (retested) or "broken" (invalidated).

• Zone Mitigation: When price returns to an order block, the indicator can highlight the retest candle, signaling a potential entry point.
• Invalidation: If price action closes through the opposite side of an order block, the script automatically removes the zone from the chart to maintain a clean workspace.
• Market Structure: Users can enable Break of Structure (BOS) lines to visualize the transition from bullish to bearish trends.

Details

The script executes logic based on a user-defined candle range to determine local highs and lows. It tracks the most recent "up" and "down" candles leading into a structure break.

• Bullish Break: Occurs when the price crosses above the top of a recent bearish block or a previous swing high.
• Bearish Break: Occurs when the price crosses below a calculated structure low within the specified range.
• Cleanup Logic: To prevent chart clutter, the script utilizes arrays to manage box objects. It constantly checks if current price action has violated the boundaries of existing blocks, triggering their removal or changing their color to signify mitigation.

Settings

BASIC SETTINGS

• Candle Range: Sets the lookback period (5-100) used to determine the market structure and local highs/lows.
• Bullish/Bearish Breaker Source: Defines the price source (e.g., Close, High, Low) used to trigger the detection of a structural break.

Extras

• Show Previous Day High/Low: Plots horizontal lines representing the high and low of the previous trading day.
• Show Bearish/Bullish BOS Line: Displays lines on the chart where market structure breaks occur.
• Highlight Breaker Candles: Changes the color of the specific candle that triggered the order block.
• Highlight Re-test Candles: Changes the color of candles that enter a previously formed order block.
• Show Trend Colours: Colors the bars based on the current detected market trend.
• Trigger Alerts: Enables internal logic for alert conditions.
• Show Mitigated Blocks: If enabled, blocks that have been touched by price will change to a "mitigated" color rather than being removed immediately.

STYLES

• Order Block Colours: Customizes the background colors for Bullish, Bearish, and Mitigated zones.
• Trend/Retest Colours: Customizes the colors used for candle highlighting and trend visualization.

FAQ

How do I interpret a mitigated order block? A mitigated block indicates that price has returned to the zone to "fill" remaining orders. While these zones can still provide support or resistance, they are often considered weaker than unmitigated (fresh) blocks.

Why did an order block disappear from my chart? Order blocks are removed when price action closes through the zone, signifying that the supply or demand at that level has been exhausted or overwhelmed.

How can 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.