Order Blocks Indicator Lightning | CHOCH | OB | BOS

The Order Blocks Indicator [Lightning | CHOCH | OB | BOS] indicator identifies institutional supply and demand zones by detecting significant price action levels where major market participants have likely executed bulk orders. It aims to help traders find high-probability reversal points while maintaining a clean, minimal design to reduce chart clutter.

Usage

This indicator automatically highlights Demand Zones (green) and Supply Zones (red) on the chart. Traders can use these zones to identify potential entry points, set stop-loss levels, or determine profit targets. The midpoint (50% level) of each order block is also displayed as a key reference point.

Market Structure Identification

The tool identifies two primary types of structural breaks:

• Break of Structure (BoS): Occurs when the price breaks a level in the direction of the current trend. For example, a break above a recent high in an uptrend.
• Change of Character (CHoCH): Occurs when the price breaks a level contrary to the previous trend, often signaling an early shift in market direction or structure.

Refinement Modes

The indicator includes a "Refine" algorithm to adjust the width of detected blocks based on trader preference:

• Defensive: Provides a tighter, smaller range. This is ideal for risk-averse traders seeking tighter stop-losses and higher reward-to-risk ratios.
• Aggressive: Identifies a larger range for the order block, suitable for traders who prefer entering positions earlier or want to ensure they don't miss a move due to a narrow zone.

Details

The script operates by tracking "Major Levels" that form when price breaks a previous significant level. To identify a valid Order Block, a "Level Break" must occur first:

• Demand Zone: Requires a High Level Break.
• Supply Zone: Requires a Low Level Break.

The indicator uses a specialized error correction algorithm when the "Refine" setting is active, attempting to detect the optimal range by analyzing volatility (ATR) and candle characteristics (body size vs. range).

Settings

Order Block Settings

• Order Block Refine: Toggles the refinement algorithm on or off. When off, original order block dimensions are used.
• Refine Type: Switches between "Defensive" (tighter zones) and "Aggressive" (wider zones) refinement logic.

Major Levels

• Show High Level: Displays major resistance levels on the chart, which can be used to identify liquidity or target points.
• Show Low Level: Displays major support levels on the chart.

FAQ

How do I use the CHoCH and BoS labels?

BOS labels help confirm trend continuation, while CHoCH labels provide an early warning that the trend may be reversing, allowing you to prepare for new Supply or Demand zones.

What is the difference between Defensive and Aggressive refinement?

Defensive mode refines the zone to a smaller area for precise entries, whereas Aggressive mode keeps a wider zone to ensure the price is more likely to touch the area.

How can I access this indicator?

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