Demand and Supply Candles-open

The Demand and Supply Candles-open indicator identifies basing and explosive candles to help traders visualize market equilibrium and imbalance based on Supply and Demand methodology.

Usage

The Usage section focuses on identifying two primary candle types that dictate price action context:

• Boring Candles (Basing): These candles appear in blue and signify a period where supply and demand are in relative balance. They typically represent consolidation or "basing" before a significant move.
• Explosive Candles (Exciting): These candles appear in the chart's foreground color (typically black or white depending on your theme) and signify a strong imbalance between buyers and sellers. These are often used to identify "leg-in" or "leg-out" moves from a zone.

Traders can use these color-coded candles to identify high-probability supply and demand zones manually by looking for "boring" bases followed by "explosive" departures.

Details

The script distinguishes candle types based on the relationship between the candle body and its total range, as well as volatility:

• Boring Candle Logic: A candle is classified as "Boring" if its body range is less than or equal to 50% of its total high-low range. This indicates indecision or a tight battle between bulls and bears.
• Explosive Candle Logic: A candle is classified as "Explosive" if its body range exceeds 60% of its total range and the total candle range is greater than or equal to a volatility-adjusted threshold (using Average True Range). This ensures that only significant price expansions are highlighted.

Settings

• LegoutStrength: Adjusts the sensitivity for detecting explosive candles. A higher value requires a larger price move relative to recent volatility to trigger an explosive candle highlight.

FAQ

How do I use the Demand and Supply Candles-open indicator?

Simply add the script to your chart to see candles color-coded based on their price action characteristics (blue for basing, chart foreground color for explosive).

Can I set alerts for specific candle types?

Yes, the indicator includes alert conditions for both "Boring Candle Detected" and "Explosive Candle Detected" to notify you the moment price action shifts.

Where can I access this tool?

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