Ranking Order Blocks by Displacement Strength and Retests
Summary
This indicator defines order blocks using displacement: a bullish setup requires a bearish candle followed by a bullish candle that closes above the prior high with a sufficiently large body; bearish conditions mirror the rule. The block spans the full range of the preceding opposite candle. A power score compares that range with the largest candle range in a recent lookback window, and opacity makes stronger relative scores more prominent. The indicator also draws an equilibrium line, records retests, and marks rejection arrows.
Blocks are removed after a close beyond their far boundary, replaced when a newer same-side block overlaps, and limited to a configurable number per side. Retest counts can indicate repeated reactions, though repeated tests may also weaken a level. The document provides implementation logic and suggested chart uses, but no backtest or evidence that these filters improve trading results. Power is relative to a rolling sample, and signals still require contextual interpretation.
Key ideas
- A qualifying order block follows a displacement candle that exceeds the prior candle's range by a configurable threshold.
- The power score scales a block's range against the largest candle range in a recent lookback window.
- Block opacity, equilibrium lines, touch counts, and arrows provide visual context for strength and retests.
- A close beyond the far edge invalidates a block, while overlap replacement and a per-side cap control chart clutter.
- Repeated retests can show a defended level but may also indicate that it is becoming more vulnerable.
- The document describes indicator logic but supplies no performance testing.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.