Order Blocks with signals

The Order Blocks with signals indicator automatically identifies and visualizes institutional supply and demand zones to help traders find high-probability entry points. It streamlines the process of locating areas where significant price movements originated, providing real-time visual boxes and alerts when price interacts with these zones.

Usage

The Usage section describes how the script can be used to identify market imbalances and potential reversal zones.

• Bullish Order Blocks (Demand): These are represented by green boxes. Traders typically look for long opportunities when the price returns to these zones, as they represent areas where institutional buying interest was previously concentrated.
• Bearish Order Blocks (Supply): These are represented by red boxes. Traders typically look for short opportunities when the price retraces into these areas, as they indicate where institutional selling pressure originated.
• Signal Generation: The tool generates alerts when the price enters an active order block. A "Buy" signal occurs when the price dips into a bullish zone, while a "Sell" signal occurs when the price rises into a bearish zone.

Details

The script identifies order blocks by calculating a custom Rate of Change (ROC) to detect high-momentum price shifts. When the ROC exceeds the user-defined sensitivity threshold, the algorithm scans the preceding 4 to 15 candles to locate the specific "last candle" of the opposite direction before the move began. This candle is then used as the basis for the Order Block box.

The indicator includes a mitigation logic system. Once an order block is created, it remains active on the chart until it is "mitigated" (broken). Users can choose whether mitigation occurs based on the candle close or the price wick. Once price moves through the zone according to the selected mitigation type, the box is removed from the chart to maintain a clean workspace.

Settings

• Sensitivity: Adjusts the threshold for detecting momentum moves. Lower values result in more frequent order blocks, while higher values filter for only the most significant moves.
• OB Mitigation Type: Determines what triggers the removal of an order block. "Close" requires a candle to close past the zone, while "Wick" removes the zone as soon as the price touches the opposite side.
• Bullish OB Border / Background: Customizes the visual appearance (color and transparency) of demand zones.
• Bearish OB Border / Background: Customizes the visual appearance (color and transparency) of supply zones.
• Buy Signal: Enables or disables alerts when the price enters a bullish order block.
• Sell Signal: Enables or disables alerts when the price enters a bearish order block.

FAQ

How do I use the sensitivity setting? If you see too many small zones, increase the sensitivity value to focus on major institutional moves. If the chart is empty, decrease the sensitivity to capture smaller intraday imbalances.

What is the difference between Wick and Close mitigation? Wick mitigation is more aggressive, removing a zone the moment price pierces through it. Close mitigation is more conservative, keeping the zone active until a candle confirms a breakout by closing outside the block.

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.