ATR-Filtered Order Blocks with First-Touch Mitigation Tracking

Summary

This indicator identifies order blocks from displacement candles filtered by Average True Range. When a candle body exceeds a configurable ATR multiple, the immediately preceding candle of the opposite direction defines a bullish or bearish zone. The indicator extends active zones forward and monitors subsequent bars for a return into the zone. Depending on the selected setting, a wick touch or a close inside the zone marks mitigation; the zone then fades and an arrow marks the bar of the event.

The proposed use is to focus on untouched zones for pullback setups aligned with the original impulse, while treating mitigated zones as historical context. The author suggests adding lower-timeframe confirmation rather than entering automatically at a touch and adjusting the impulse threshold to market conditions. The example and recommendations are descriptive; the document provides no systematic backtest or evidence of predictive performance. Zone detection, touch rules, and discretionary confirmation can materially affect signals, so traders would need to validate them on their own instruments and execution assumptions.

Key ideas

• An order block is defined as the candle preceding an opposite-direction impulse whose body clears an ATR-based threshold.
• The indicator tracks zones forward and marks them mitigated when price returns by wick or candle close, according to the chosen mode.
• Untouched zones are proposed as pullback areas in the direction of the original impulse, with lower-timeframe confirmation advised.
• The impulse threshold controls how many zones appear and how much weak displacement is filtered out.
• The document gives usage guidance but no systematic evidence that the zones predict profitable trades.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.