RSI Support & Resistance Breakouts with Orderblocks

The RSI Support & Resistance Breakouts with Orderblocks indicator provides a dynamic method for identifying market squeezes and breakout levels based on real-time Relative Strength Index (RSI) momentum. By utilizing a dual-zone system, it distinguishes between internal liquidity clusters and external price extremes to highlight potential reversal or expansion areas.

Usage

The indicator identifies two distinct types of zones during ranging market conditions:

External Zones These zones represent the highest and lowest price points traded during a range. They are designed to show where liquidity is swept and are often the ultimate breaking point for new price swings. A price breach above an external zone during a corrective wave may signal trend weakness and a potential reversal.

Internal Zones (Orderblocks) Internal zones represent the area where the majority of trading volume occurred, often identified as a "squeeze." The midline of this zone acts as a Point of Control. Price action typically struggles to close beyond these levels, making them strong indicators of where the market may flip.

Breakout Coloring The indicator includes optional bar coloring to signal market state changes:

• Bullish Color: Confirms a bullish breakout from the range.
• Bearish Color: Confirms a bearish breakout from the range.
• Squeeze Color: Highlights candles where the market is tightly ranging within a single bar's high and low.

Details

The tool uses a 200-period Smoothed Moving Average (SMA) as a trend filter, which dynamically shifts the RSI calculation thresholds. This adjustment allows the tool to adapt to bullish or bearish market contexts, providing more accurate support and resistance levels than a standard static RSI. The zones update in real-time until momentum picks up and a trend is established, leaving behind key levels that remain relevant for future price action.

Settings

RSI Settings

• RSI Length: Determines the lookback period for the RSI calculation (default is 14).

Zone Settings

• Show Ranges: Toggles the visibility of the External Zones.
• Show Orderblocks: Toggles the visibility of the Internal Zones.
• Use Breakout Bar Colors: Enables or disables the momentum-based candle coloring.
• Internal/External BG & Border: Customizes the colors for the different zone types.
• Extend Orderblock/Range into future: Sets how many bars into the future the zones should be projected for better visibility against current price action.

FAQ

How do I use the Internal Zones effectively?

Internal zones (Orderblocks) are most powerful when they remain untouched. Once a zone has been tested multiple times, its relevance decreases.

What does the midline represent?

The midline is the center of the internal zone, acting as an equilibrium point. If price oscillates through both extremes of the zone multiple times, the orderblock is considered invalidated.

How 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.