Supply/Demand Zones + Engulfment-based Execution

The Supply/Demand Zones + Engulfment-based Execution tool identifies institutional supply and demand zones using aggregated price action and automates trade entries based on engulfing candle confirmations. It aims to provide high-probability setups by ensuring market structure alignment before execution.

Usage

The indicator can be used to identify key reversal or continuation areas and automate entries within those zones. Users typically look for price to return to a demand zone for a long setup or a supply zone for a short setup.

• Zone Identification: Supply and demand zones are automatically plotted based on the Aggregation Factor.
• Trade Confirmation: An entry is triggered only when a bullish engulfing pattern occurs within a demand zone or a bearish engulfing pattern occurs within a supply zone.
• Risk Management: The script automatically calculates stop-loss levels based on the engulfed candle's extreme and sets take-profit levels using a fixed Risk-to-Reward (R) multiple or a specific target price.
• Session Filtering: Use the Start and End Hour settings to restrict trading to high-liquidity sessions like London or New York.

Details

The script utilizes a custom aggregation logic to group candles into larger structural units (e.g., grouping 4 candles together). This helps in identifying "institutional" zones where price showed significant commitment. Supply zones are generated following bearish continuation patterns from these aggregated groups, while demand zones follow bullish ones. By requiring an engulfing candle for execution, the script avoids "blind" limit orders at zones, requiring instead that price shows immediate rejection and momentum in the desired direction.

Settings

Supply/Demand Zones

• Aggregation Factor: Determines how many candles are grouped to identify zones (e.g., 4x the current timeframe).
• Show Supply/Demand Zones: Toggles the visibility of identified zones.
• Delete Mitigated Zones: If enabled, zones are removed once price has revisited them.

Engulfing Strategy

• R Multiple: Sets the risk-to-reward ratio for the take-profit level.
• Use Target Price Instead of R Multiple?: Allows for a fixed price target rather than a calculated one.
• Fixed Take Profit Price: The specific price level for take-profit if the above setting is enabled.
• Draw Entry/SL/TP Boxes: Toggles visual representations of the trade setup on the chart.

Time & Execution

• Trade Mode: Choose between "Both", "Long Only", or "Short Only".
• Strategy Start/End Date & Time: Sets the historical window for the strategy to operate.
• Start/End Hour (UTC): Restricts trade execution to specific hours of the day.

FAQ

How do I access Supply/Demand Zones + Engulfment-based Execution?

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

Can I use this for intraday trading?

Yes, the script is highly effective on 15m to 1H charts when combined with session filters to capture intraday volatility.

Does this script repaint?

No, the script executes trades and identifies zones based on bar-close calculations to ensure signals are confirmed and static.