Supply & Demand (MTF)

The Supply & Demand (MTF) indicator identifies high-momentum institutional zones across multiple timeframes to reveal where market makers are likely entering or exiting large positions. By detecting sequences of momentum candles, the tool provides traders with visual support and resistance zones that include automatic overlapping zone merging for a cleaner chart.

Usage

The indicator detects Supply and Demand zones by identifying consecutive "momentum candles" (candles with bodies larger than the historical average). These zones act as institutional support and resistance areas.

• Supply Zones (Bearish): Highlight areas of strong selling pressure. A retest of these zones often results in a bearish bounce, while a breakout suggests further upside momentum.
• Demand Zones (Bullish): Highlight areas of strong buying pressure. A retest often leads to a bullish bounce, while a breakout indicates significant downward momentum.
• Multi-Timeframe (MTF) Analysis: Users can enable up to three different timeframes simultaneously. The script identifies zones on higher timeframes and projects them onto the current chart, allowing for a top-down market perspective.
• Zone Merging: To reduce chart clutter, overlapping zones from different timeframes are automatically combined into a single, unified zone.
• Retests & Breaks: Labels automatically appear when the price returns to test a zone or successfully breaks through it, signaling potential entries or trend shifts.

Details

The script calculates momentum by comparing the body size of the current candle to a 20-period Simple Moving Average of candle bodies. A zone is established when a user-defined number of momentum candles (default is 4) appear in a row. The zone boundaries are drawn from the high to low wicks of the two candles preceding the momentum surge.

Users can choose between "Wick" or "Close" price for zone invalidation. In "Wick" mode, the zone is invalidated the moment a wick penetrates the boundary. In "Close" mode, the zone remains active until a candle closes outside the boundary.

Settings

General Configuration

• Max Distance To Last Bar: Controls how far back the indicator looks to render historical zones. Options include High, Normal, and Low.
• Zone Invalidation: Determines if a zone is broken by the candle's Wick or only on a Close price.
• Retests: Toggles the visibility of retest labels on the chart.
• Breaks: Toggles the visibility of breakout labels on the chart.
• Show Historic Zones: When enabled, zones that have been invalidated remain visible on the chart.
• Demand/Supply Colors: Customizes the background and border colors for bullish and bearish zones.

Timeframes

• Timeframe 1, 2, 3: Individual toggles and timeframe selectors to enable multi-timeframe analysis (e.g., viewing 1-hour and 4-hour zones on a 15-minute chart).

FAQ

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

What counts as a "momentum candle" in this script? A momentum candle is defined as having a body larger than the average body size of the last 20 candles. The script requires a sequence of these candles to confirm a supply or demand zone.

Can I set alerts for when price enters a zone? Yes, the script is alert-optimized, allowing you to set notifications for both retests of active zones and successful breakouts of historical zones.