Supply and Demand - Order Block - Energy Candles

The Supply and Demand - Order Block - Energy Candles indicator highlights the last up or down candle preceding a fractal break to identify significant points of origin for market strength. By visualizing these "energy candles," the tool helps traders identify potential supply and demand zones where price momentum was sufficient to shift market structure.

Usage

Traders can use this tool to anticipate potential price reactions in key structural areas.

• Bullish Reversals: When price breaks above a previous up-fractal, the indicator marks the last down candle (red) as a demand zone.
• Bearish Reversals: When price breaks below a previous down-fractal, the indicator marks the last up candle (green) as a supply zone.
• Retests: Zones are expected to act as support or resistance. A fresh, untested zone typically has a higher probability of a bounce, while zones tested multiple times are more likely to break.
• Zone Flipping: If the "Change Box Colors" setting is enabled, zones will dynamically update their color based on whether the current price is above or below them, assisting in identifying potential S/R flips.

Details

The script functions by identifying market fractals (swing highs and lows) and monitoring for breaks of these levels. A break is defined based on the user's preference of either wick or body interaction. The "Energy Candle" is technically the most recent candle of the opposite color prior to the break, representing the final "push" or accumulation/distribution phase before the structural shift occurred. This implementation ensures that zones are rooted in actual price action shifts rather than arbitrary levels.

Settings

• Change Box Colors?: When enabled, boxes will change color (green if price is above, red if price is below) to reflect their current status as support or resistance.
• Fractal Break Type: Determines whether a break is triggered by the price high/low (Wick+Body) or strictly by the candle close (Body).
• Periods: Sets the lookback and lookahead period for fractal detection. A higher value identifies more significant, long-term structural points.
• Colors: Customization options for the background and border colors of both supply and demand zones.

FAQ

How do I access Supply and Demand - Order Block - Energy Candles?

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

Which timeframe works best for this indicator?

The indicator can be used on all timeframes, though higher timeframes (such as 1H, 4H, or Daily) typically provide more reliable supply and demand zones.

What causes a zone to be created?

A zone is created when the price breaks a fractal level. The indicator then identifies and boxes the last candle of the opposite direction before that break occurred.