Detecting Volume-Based Order Blocks as Support and Resistance Zones

Summary

This document explains an order block indicator that marks potential support and resistance zones using volume pivots alongside price direction. It distinguishes bullish zones after downward movement from bearish zones after upward movement. The described ProRealTime implementation uses a configurable lookback length, retains a chosen number of recent unmitigated zones, and lets the user define mitigation by closing prices or wick extremes. It draws each zone and its midpoint on the chart.

The article presents the indicator’s mechanics and suggests using detected zones alongside other technical signals to assess possible entries and exits. Its support and resistance interpretation is a trading hypothesis, not demonstrated evidence: no backtest, market-specific results, or predictive accuracy measures are given. The claim that volume and price action reveal activity by major market participants is not independently established in the document. Users would need to define the underlying data and test the detection rules, including mitigation choices, before relying on them.

Key ideas

• The indicator identifies candidate order blocks from volume pivots combined with price direction.
• Bullish zones are treated as possible support, while bearish zones are treated as possible resistance.
• The lookback, number of displayed zones, and wick-or-close mitigation rule are configurable.
• The document recommends confirming zones with other technical signals.
• It reports no backtest or evidence that the zones predict future price movement.

Tags

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