Trend-Filtered Engulfing Order Blocks with ATR-Based Candle Tests

Summary

This indicator identifies bullish and bearish engulfing patterns and draws a rectangle using the first candle’s range as an order-block zone. A preceding candle must have a body larger than a fraction of the 10-period average true range, and the engulfing candle must meet a body-size comparison against that prior candle. The code draws the bullish zone in blue and the bearish zone in red, extending each rectangle a fixed number of bars.

The description says the approach also uses 21- and 55-period simple moving averages to filter trend direction, although the included code excerpt does not show those filters. It cautions that the indicator does not verify a retracement before the engulfing pattern, and recommends considering blocks formed after a pullback. No test results or trading rules for entries, exits, or risk are presented, so the rectangles are candidate zones rather than validated trade signals.

Key ideas

• The indicator marks engulfing patterns and defines each order-block zone from the first candle’s range.
• It applies ATR-based body-size conditions to the preceding and engulfing candles.
• The description reports simple moving-average trend filters, but they are not visible in the included code excerpt.
• The indicator does not require a retracement before a pattern forms, which the author identifies as a limitation.
• No performance evidence or complete trade-management rules are provided.

Tags

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