Order Blocks & Imbalance

The Order Blocks & Imbalance indicator automatically identifies and plots institutional supply and demand zones based on Smart Money Concepts (SMC) and ICT methodology. It highlights significant price inefficiencies (Fair Value Gaps) that serve as high-probability areas for price reversals or continuations.

Usage

The tool is designed to highlight areas where institutional "Smart Money" has entered the market, leaving behind gaps in price action.

• Demand Zones (Bullish): Labeled as "OB Demand" in green. These are areas where price moved aggressively upward. Traders often look for long entries when price returns to these zones.
• Supply Zones (Bearish): Labeled as "OB Supply" in red. These represent areas of aggressive selling. Traders often look for short opportunities when price retraces into these levels.
• Mitigation: The indicator tracks when a zone has been "tested." A mitigated zone changes its visual appearance (faded color, dotted border) to indicate that some of the original imbalance has been filled, potentially reducing its future strength.
• Smart Visibility: When enabled, the script cleans the chart by only showing the zones closest to the current market price, making it easier to focus on immediate trade setups.

Details

The indicator utilizes a specific 3-candle technical methodology to detect imbalances:

• FVG Detection: It identifies gaps between the high of candle N-2 and the low of candle N (for bearish) or the low of candle N and high of candle N-2 (for bullish).
• Threshold Filtering: To ensure quality, the script uses an ATR-based multiplier. Only gaps larger than the defined threshold (default 0.5 * ATR) are plotted, filtering out market noise.
• Zone Management: The tool dynamically manages the lifecycle of each zone. If price closes entirely through a zone (invalidation), the box is removed to keep the chart relevant.
• Multi-Timeframe (MTF) Support: Users can select different timeframes to view higher-timeframe order blocks on lower-timeframe charts for confluence.

Settings

Logic Settings

• Timeframe: Allows users to select the timeframe from which the order blocks are calculated.
• Min FVG Size (ATR Multiplier): Adjusts the sensitivity of detection. Higher values result in fewer, more significant zones.
• Mitigation Method: Choose between "Close" or "Wick" to determine when a zone is considered touched/mitigated.
• Show Demand/Supply: Toggles the visibility of bullish or bearish zones individually.

Smart Visibility

• Enable Smart Visibility: Filters the chart to show only the most relevant zones near the current price.
• Max Zones to Show (Per Side): Limits the number of visible supply and demand zones.
• Auto-Extend Visible Zones: Extends the right side of the active boxes into the future for better visual alignment.

FAQ

How do I use the Order Blocks & Imbalance indicator?

Apply the indicator to your chart and look for price to return to the highlighted green (Demand) or red (Supply) boxes. These areas often act as support or resistance where institutional orders may be waiting.

What is the difference between an active and a mitigated zone?

An active zone has not been touched by price since its creation and represents "fresh" liquidity. A mitigated zone has been partially filled by a subsequent wick or close, which may weaken the level.

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.