The Breaker Blocks with Signals indicator aims to highlight a complete methodology based on breaker blocks. Breakout signals between the price and breaker blocks are highlighted and premium/discount swing levels are included to provide potential take profit/stop loss levels.
This script also includes alerts for each signal highlighted.
🔶 SETTINGS
🔹 Breaker Blocks
Length: Sensitivity of the detected swings used to construct breaker blocks. Higher values will return longer term breaker blocks.
Use only candle body: Only use the candle body when determining the maximum/minimum extremities of the order blocks.
Use 2 candles instead of 1: Use two candles to confirm the occurrence of a breaker block.
Stop at first break of center line: Do not highlight breakout signals after invalidation until reset.
🔹 PD Array
Only when E is in premium/discount zone: Only set breaker block if point E of wave ABCDE is within the corresponding zone.
Show premium discount zone: Show premium/discount zone.
Highlight Swing Break: Highlight occurrences of price breaking a previous swing level.
Show Swings/PD Arrays: Show swing levels/labels and pd areas.
🔶 USAGE
The Breaker Blocks with Signals indicator aims to provide users with a minimalistic display alongside optimal signals to be aware of for finding trade setups as shown below.
Here we can see a MSS occurred allowing the indicator to detect a Breaker Block (-BB) & display a red arrow to confirm this signal.
The signal(s) that can be used for potential entries are only during retests of the breaker blocks.
A potential strategy traders could use with this indicator is to target the corresponding Discount PD Arrays detected (for a short position) and Premium PD Arrays (for a long position).
In the image above we can see price generated the potential entry signals in orange & fell to the Discount PD Arrays as a logical setup to look for with this indicator.
As we can see in the image above, signals can be considered invalid when price closes above the 50% level in which it would be suggested to wait for another setup.
Users still looking for more potential setups based on the same breaker block can disable the "Stop at first break of center line" setting within the settings menu.
In the image above we can see a bullish example whereas price confirmed a bullish breaker block (+BB), had a quick pullback into it that was confirmed by the green arrow, and then reached the Premium PD Arrays.
While retests of breaker blocks can still function well if they occur later in the price action, it's most preferable for users to look for entry signals that are near confirmed breaker blocks (5-10 bars) opposed to waiting 20+ bars.
Additional take profits based on the occurence of the breaker blocks are given in order to provide targets after the occurence of a breaker block breakout.
🔶 DETAILS
Breaker blocks are formed after a mitigated order block, these can provide change of polarity opportunities, thus playing a role as a potential support/resistance. It is the re-test/retrace of price to a breaker block that will set the conditions to provide signals.
The above chart describes the creation of a breaker block.
The signal generation logic makes use of various rules described below:
Bullish Breaker Blocks:
opening price is within the breaker block, while the closing price is above the upper extremity of the breaker block.
Price did not cross the breaker block average in the interval since the previous breakout.
Bearish Breaker Blocks:
opening price is within the breaker block, while the closing price is below the lower extremity of the breaker block.
Price did not cross the breaker block average in the interval since the previous breakout.
When a new pattern is formed, all previous drawings are removed.
@JoCube, Is it repainting? Is it real time signal?
reaganlangevin
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@ashishpwr1, it removes the signal once a new one is detected is the text book definition of repainting, in other words it’s a lagging indicator. I wouldn’t trust it.
Tom4Townsend
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Thanks, super helpful! And for all the improvement updates!
In the provided code snippet, it appears that the yellow dot is used to mark a potential failure or mitigated condition of a breaker. To better understand the logic and significance of this step, let's break it down:
Mitigated Condition: The indicator checks for a condition called "Mitigated." If this condition is met, it implies that the breaker's previous setup, which may have indicated a potential price move, has been negated or invalidated in some way. This could be due to a change in market conditions or price movement that goes against the expected breakout.
Alerts: The indicator generates an alert labeled "+BB Mitigated" when the "Mitigated" condition is met. This alert could serve as a notification to traders that the previous breaker setup is no longer valid, and they should exercise caution when trading based on the earlier setup.
Yellow Dot: To visually represent this mitigated condition, the code appears to use a yellow dot. This dot is likely placed on the chart to highlight the point at which the breaker's setup lost its validity. Traders can see this dot on the chart and take it as a signal that the earlier breakout scenario may not unfold as anticipated.
Significance: The significance of the yellow dot lies in its role as a warning or signal to traders. It indicates that conditions have changed, and the earlier analysis or expectation of a breaker may no longer hold. Traders who were initially considering taking positions based on the breaker setup may reconsider or adjust their trading strategies in response to this signal.
Overall, the yellow dot is a visual representation of a mitigated breaker setup, and its significance is in alerting traders to changing market conditions that could affect their trading decisions. It serves as a warning to exercise caution and potentially reevaluate trading plans.
@ThePig If you see the x, it means the breaker setup is no longer good because it has encroached on mean threshold of the breaker move than 50%. And if you see the yellow dot, it means that the breaker has been completely traded through so you must wait for another one (or apply whatever trade strategy you have for a mitigated breaker is if you find one or develop your own. Hope that helps.
Orph5781
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Wonderful work of art !!! How can I do in order that when appears entry alert, it makes a sound so to auditively know it activated?
ashishpwr1
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@Orph5781, Is it repainting? Is it real time signal?