Detecting Order Blocks with Price Action and Volume Rules

Summary

This article explains how to program an indicator that marks order block zones using candlestick patterns and volume. Its basic method looks for runs of consecutive bullish or bearish candles and applies geometric checks to candle bodies and extremes to qualify the zone. An intermediate variant adds volume conditions, including rising volume across several candles or a single high-volume candle combined with follow-through price rules.

The article outlines indicator inputs for search range, rectangle appearance, and bullish or bearish colors, then describes drawing zones and issuing alerts when they are mitigated or removed. The proposed rules are presented as an implementation of Smart Money Concepts and Inner Circle Trader ideas, with the premise that these zones reflect areas of imbalance and possible pending orders. The document gives coding logic rather than empirical validation: it does not establish that the patterns reliably identify institutional activity or produce profitable trades. The author also describes future extensions, including signal buffers, stop and target levels, and order-book-based detection.

Key ideas

• The basic detection method identifies four-candle directional runs and checks candle relationships to define a zone.
• A volume-based variant uses rising activity or a volume spike alongside price confirmation rules.
• The indicator draws bullish and bearish zones as chart rectangles and can alert when a zone is mitigated.
• The described pattern rules are implementation choices and are not supported here by performance evidence.

Tags

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