Order Blocks

The Order Blocks indicator identifies key market interest areas by rendering order blocks alongside their volumetric data. It provides traders with a visual representation of institutional supply and demand zones, enhanced with volume ratios to help determine the strength and validity of each zone.

Usage

This tool identifies Bullish and Bearish Order Blocks based on specific price formations. Traders can use these zones to anticipate potential reversals or continuations.

• Identifying Strength: By enabling Volumetric Information, you can see the total volume traded within a zone. High-volume order blocks typically suggest stronger institutional activity.
• Invalidation: Zones are automatically tracked; when price breaks through a zone (based on the chosen invalidation method), it can be labeled as a historic zone or "breaker."
• Visual Clarity: The "Combine Zones" feature merges overlapping order blocks, which is particularly useful in trending markets to keep the chart clean and highlight consolidated areas of interest.

Details

Order blocks occur when a high concentration of market orders exists within a specific price range. This script detects these formations using swing highs and lows defined by the Swing Length parameter.

A unique feature of this indicator is how it calculates volume:

• Bullish Order Block: The "high volume" component is calculated from the total volume of the last two bars, while the "low volume" represents the volume of the oldest bar in the formation.
• Bearish Order Block: The calculation is inverted to reflect selling pressure. The indicator then calculates the bullish/bearish volume ratio to provide a percentage-based strength metric displayed on the zone labels.

Settings

General Configuration

• Show Historic Zones: When enabled, the indicator keeps invalidated (broken) order blocks on the chart.
• Volumetric Info: Toggles the display of volume metrics and the internal volume ratio bars within the zones.
• Zone Invalidation: Determines if a zone is considered broken based on price Wick or Close.
• Swing Length: Sets the lookback period for finding order block formations. Smaller values detect more frequent, smaller zones; larger values identify major institutional levels.
• Zone Count: Controls how many historical zones are rendered on the chart (Low, Medium, High, or One).
• Colors (Bullish/Bearish): Customizes the visual appearance of the respective zones.

FAQ

How do I interpret the volume percentage on the labels? The percentage represents the ratio between the high and low volume components of the formation. A higher percentage suggests more balanced participation, while significant volume spikes indicate aggressive institutional positioning.

What is the difference between "Wick" and "Close" invalidation? "Wick" invalidation removes or marks a zone as broken as soon as price touches the boundary. "Close" invalidation requires a candle to close outside the zone, filtering out temporary stop-runs.

How do I access the Order Blocks tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.