Detecting Order Blocks from Sequential Candles and Price Moves
Summary
This experimental indicator marks a bullish order block at the last down candle before a chosen run of up candles, and a bearish block at the last up candle before a run of down candles. A percentage-move threshold can filter out sequences that do not travel far enough. The marked zone uses the candle’s open and low for bullish blocks and open and high for bearish blocks by default; an option expands both zones to the candle’s full high-low range. The midpoint is also shown as an equilibrium level.
The indicator can extend boundaries for the latest bullish and bearish zones, display their values, and trigger alerts after the required sequence completes. The author frames these levels as areas that price may revisit and where limit orders might be considered, while explicitly distinguishing detection alerts from buy or sell signals. No statistical evidence or tested performance is provided, and the order-block definition is a configurable heuristic; the indicator alone does not establish that a level will hold or be revisited.
Key ideas
- A bullish block is defined as a down candle followed by a selected run of up candles.
- A bearish block uses an up candle followed by a selected run of down candles.
- A minimum percentage move can be required to validate a detected sequence.
- Zones can use candle bodies or full high-low ranges, with the midpoint marked as equilibrium.
- Alerts identify completed patterns but are not entry signals, and no performance evidence is given.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.