Order Block Finder

The Order Block Finder indicator identifies institutional order blocks (OB) by detecting specific candle sequences that signal the start of strong price movements. It provides traders with high-probability levels for future price revisits, making them useful for placing limit orders or identifying supply and demand zones.

Usage

The Usage section describes how the script can be used to identify potential market reversals or continuation zones. Users can utilize the visual labels and extended channels to pinpoint where institutional activity likely occurred.

• Bullish Order Blocks: Identified as the last down candle (bearish) followed by a specific number of subsequent up candles (bullish). These appear as green labels below the bars and include extended horizontal support zones.
• Bearish Order Blocks: Identified as the last up candle (bullish) followed by a specific number of subsequent down candles (bearish). These appear as red labels above the bars and include extended horizontal resistance zones.
• Price Levels: The indicator plots the high and low of the order block candle, creating a "channel." It also marks the average price (midpoint) of the block with a cross, which often serves as a precise level for entries.
• Trend Confirmation: By adjusting the "Relevant Periods" setting, users can ensure that an order block is only confirmed after a sustained move in the opposite direction, filtering out minor fluctuations.

Details

The script is based on the concept that institutional players leave footprints in the form of order blocks before a large move. These blocks represent areas where significant buying or selling occurred. When price returns to these levels, the remaining liquidity often causes a price reaction.

The detection logic requires a "Relevant Period" of $X$ consecutive candles moving in the opposite direction of the initial block candle. Additionally, a "Threshold" filter calculates the percentage move from the order block close to the close of the most recent candle in the sequence. This ensures that only significant price shifts are labeled as valid order blocks. The indicator uses historical referencing to back-offset labels and shapes so they align exactly with the candle that formed the block.

Settings

• Color Scheme: Allows the user to switch between "LIGHT" and "DARK" visual modes to match their charting background.
• Relevant Periods to identify OB: Defines the number of subsequent candles required in the same direction to confirm the order block.
• Min. Percent move for valid OB: Sets a minimum percentage price change required over the specified periods to validate the strength of the move.
• Number of Bullish Channels to show: Controls how many historical bullish order block zones remain visible on the chart.
• Number of Bearish Channels to show: Controls how many historical bearish order block zones remain visible on the chart.

FAQ

How do I interpret the horizontal lines extending from the labels? The dashed lines represent the high and low boundaries of the order block candle, while the solid line represents the midpoint. These areas act as support or resistance zones where price may react upon a future revisit.

Can I use this indicator for automated alerts? Yes, the script includes alert conditions for both Bullish and Bearish Order Blocks. You can configure these to notify you immediately upon a bar close when a new block is confirmed.

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