Order Block Finder (Experimental)

The Order Block Finder (Experimental) indicator identifies institutional order blocks to highlight potential price reversal or mitigation zones. By detecting specific sequences of candles followed by strong directional moves, the tool marks high-probability areas where institutional liquidity may reside, offering traders precise levels for limit orders or trade entries.

Usage

The Usage section focuses on identifying key supply and demand zones based on institutional price action. Traders use these zones to anticipate where price might return for a "mitigation" before continuing its original trend.

• Bullish Order Blocks: These are identified as the last down candle (red) before a sustained sequence of up candles (green). The indicator marks the range from the "Open" to the "Low" (or optionally the full wick range). These levels serve as potential support for future long entries.
• Bearish Order Blocks: These are identified as the last up candle (green) before a sequence of down candles (red). The indicator marks the range from the "Open" to the "High" (or optionally the full wick range). These levels serve as potential resistance for future short entries.
• Equilibrium (Avg): The indicator marks the midpoint of every order block. This "average" price is often a highly sensitive area where significant price interaction occurs.
• Confirmation: A percentage threshold can be applied to ensure the order block is followed by a sufficiently strong move, filtering out low-volatility consolidation zones.

Details

The script functions by looking back a specific number of periods to verify if a candle was followed by a consistent directional expansion.

• Logic Construction: A Bullish OB is confirmed only if the subsequent "X" number of candles are all bullish and the total percentage move meets the user-defined threshold.
• Repainting Note: Because an order block can only be confirmed after the subsequent candles have closed, the indicator plots the block retroactively at the origin candle. While this technically "repaints" the historical block, it does not impact utility as the relevance of these levels typically lasts for many bars into the future.
• Visual Channels: The script can extend lines from the most recent Bullish and Bearish blocks to the right side of the chart, providing a clear visual of active supply and demand zones.

Settings

• Relevant Periods to identify OB: Defines the number of consecutive candles required in one direction to qualify the preceding candle as an order block.
• Min. Percent move to identify OB: A volatility filter that requires the subsequent move to cover a minimum percentage of price change.
• Use whole range [High/Low] for OB marking?: When enabled, the script uses the candle's wicks to define the zone; when disabled, it uses the body-to-wick range (Open to High/Low).
• Show latest Bullish/Bearish Channel?: Toggles the extension lines for the most recently detected order blocks.
• Show Label for documentation tooltip?: Displays an on-chart label with a summary of the indicator logic.
• Show Latest OB Panel?: Displays a dashboard containing the price coordinates for the most recent Bullish and Bearish zones.

FAQ

How do I use the percentage threshold effectively? The threshold should be adjusted based on the timeframe. Higher timeframes (like the Daily or Weekly) generally require a higher percentage threshold to filter out noise, while lower timeframes (like the 5-minute) require a smaller value.

What does the "mitigation" alert mean? A mitigation alert triggers when price returns to a previously identified order block. This is often viewed by traders as a signal that institutional orders are being filled or "mitigated."

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.