Validated Order Blocks with Fib Levels

The Validated Order Blocks with Fib Levels indicator automatically identifies and displays Smart Money Concepts (SMC) order blocks that have been confirmed by a market structure break.

Usage

The indicator is designed to highlight institutional buying and selling zones. It identifies specific candles (last bullish candle before a swing high or last bearish candle before a swing low) and waits for a Break of Structure (BOS) to validate them as Order Blocks (OB).

• Bearish Order Blocks (Red): These appear when the price breaks below a previous swing low after a swing high has formed. They represent potential resistance zones where institutional selling may occur.
• Bullish Order Blocks (Green): These appear when the price breaks above a previous swing high after a swing low has formed. They represent potential support zones where institutional buying may occur.
• Fibonacci Levels: Each block is divided into 50%, 75%, and 100% retracement levels. These levels help traders identify high-probability entry points within the zone, such as the "mean threshold" (50% level).
• Auto-Validation: The tool automatically removes an order block from the chart if the price closes through the entire zone, signaling that the level is no longer valid.

Details

The script uses pivot-based swing detection to define market structure. A "Bearish OB" is the last up-candle before a swing high, and it is only "Validated" once the price moves lower than the most recent swing low. Conversely, a "Bullish OB" is the last down-candle before a swing low, validated only after a move higher than the most recent swing high.

The implementation includes an overlap removal system, ensuring that if a new order block forms within the range of an existing one of the same type, the chart remains clean and focused on the most relevant price action.

Settings

• Source timeframe: Allows for Multi-Timeframe (MTF) analysis. Leaving it blank uses the current chart timeframe.
• Left bars / Right bars for swing: Adjusts the sensitivity of the pivot detection used to identify swing highs and lows.
• Max valid OBs to keep: Controls the number of active order blocks displayed on the chart.
• Extend OBs: Determines how far the zones extend to the right (0 for infinite extension).
• Show BOS markers: Toggles visual labels for the Break of Structure that validates the OB.
• Remove overlapping OBs: When enabled, the script deletes older blocks that occupy the same price range as new blocks.

FAQ

How do I access the Validated Order Blocks with Fib Levels?

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

What causes an Order Block to disappear?

An Order Block is invalidated and removed if a candle closes outside the block's boundaries (above the high for bearish blocks or below the low for bullish blocks).

Can I use this for Higher Timeframe analysis?

Yes, you can use the "Source timeframe" input to display order blocks from a higher timeframe (e.g., 1H) on your current lower timeframe chart (e.g., 5m).