Order Block Finder (Experimental)

١٥ سبتمبر ٢٠٢٠

The purpose of this experimental Indicator is to help identifying Institutional Order Blocks.

Often these Order Blocks can be observed at the beginning of a strong move, but there is a significant probability that these price levels will be revisited at a later point in time again. Therefore these are interesting levels to place limit orders (Buy Orders for Bullish OB / Sell Orders for Bearish OB).

A Bullish Order block is defined as the last down candle before a sequence of up candles. (Relevant price range "Open" to "Low" is marked)
A Bearish Order Block is defined as the last up candle before a sequence of down candles. (Relevant price range "Open" to "High" is marked)

In the settings the number of required sequential candles can be adjusted.
Furthermore a %-threshold can be entered. It defines which minimum %-change the sequential move needs to achieve in order to identify a relevant Order Block. If this is used, it makes sense to adjust it to the timeframe which is analyzed as of course higher timeframes usually produce bigger moves.

Channels for the last Bullish/Bearish Block can be shown/hidden.

In addition to the upper/lower limits of each Order Block, also the equlibrium (average value) is marked as this is an interesting area for price interaction.

Please note that you can optionally display a "Docu"-Label which shows some information about the indicator as a tooltip.

Remark:
As the identification of a relevant Order Block is only possible after the required number of subsequent candles has closed, this indicator "repaints" by definition. But I do not see this as an issue as the relevancy of the Order Blocks and the interaction of price with these levels usually only happens longer in the future anyway.

١٧ سبتمبر ٢٠٢٠

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Update:

Received the request from @AtotheO to give the option to mark the full range "Low" to "High" (including both wicks) for each identified OB.

The underlying reason why I only used Open-Low for Bullish OBs and Open-High for Bearish OBs was the thought, that Institutional Investors are using these candles for their initial entries. So the assumption is that they are behaving "more smart" than the general market and tend to buy lower/sell higher that the average and therefore most probably have a more favourable entry price than the average. Therefore I left out the "unfavourable" wicks.

But I agree with the opinion that this should be selectable by the user of the indicator and here is the update:

New input field allows to select "Use whole range [High/Low] for OB marking". By default it is de-selected.

Enjoy.

١٩ أكتوبر ٢٠٢٠

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Cosmetic Update:

I received a number of remarks that the Bullish Order Blocks are not visible when bright chart background is used as they are printed in White.
I now added an option to choose a color scheme:

DARK (defaut): Bullish = White / Bearish = Blue
BRIGHT: Bullish = Green / Bearish = Red

Have fun and thanks for all the feedback.

٣ نوفمبر ٢٠٢٠

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After I have received many requests, I decided to implement ALERT functionality into the Order Block Finder.

But as there seem to be some misunderstandings and confusion about the usage and the logic of the indicator, I want to make some important remarks regarding this:

1) The Order Blocks are NOT DETECTED in REAL TIME!
- A Bullish Order Block is the last red candle BEFORE a subsequent series of green candle
- A Bearish Order Block is the last green candle BEFORE a subsequent series of red candles
The required length of the series is defined by the parameter "Relevant Periods to identify OB" (by default it is set to 5).
This means that the earliest an Order Block can be identified with these settings is 5 candles AFTER it has occurred!

As a result of this....

2) The identified Order Blocks (and therefore also the Alerts) are not BUY or SELL signals!
As I have mentioned in the description before, these identified Order Blocks rather show "Areas of Interest" on the chart where there is an increased probability that the price will revisit these levels at one point in the future (but no guarantee of course!).

3) ....and YES, it REPAINTS....by definition!
A "repainting" indicator is changing signals in the past. As according to the defined logic an Order Block can only be identified AFTER future conditions are met, it will of course "repaint" the signal into the chart only after at least the relevant period has elapsed - the same applies to the Alerts. If you intend to complain about this "repainting", then I am sorry to say that you did not understand what this is used for and I advise you not to use this indicator. I would then advise you to first read a bit about Institutional Order Flow.

4) This is not the "Perfect Indicator".....
When you look at the historical performance on the chart, it looks like that the Indicator ALWAYS called a perfect entry! But due to the definition of the logic and due to the delay/repainting, this is misleading if you do not understand how it is supposed to work. So please make sure that you REALLY understand it before you use it - I tried to be very clear in my explanations.


One more thing:
As I am not a financial adviser, this is no shape or form financial advise. This study serves only for experimental & educational purposes. Trading & investing comes with risk - so do your own research.


Cheers

٣ نوفمبر ٢٠٢٠

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Another Update!

I have received very interesting input from user Gert-Jan:
"Would it be possible to pass the values of the latest Order Blocks to the current timeframe so that they are showing in th data window? By doing this, it will be possible to set alerts when price is crossing these values."

I like this idea a lot as it opens a new way of using the indicator - and here we go:
--> Low - Average - High Values of the latest Bullish and Bearish OB are now passed to the current timeframe and the Data Window (basically the values of the blue/white lines).
--> This allows alert setting on the price when it crosses any of these values

Additionally I added an "InfoPanel" so that these values can be directly shown inside a label on the chart. This option is deactivated by default as it is not very pretty, but it can be activated in the settings.

Thanks again to Gert-Jan and Enjoy!