Order Blocks
Last updated
Last updated
Order Blocks are specific price zones where significant buying or selling activity has previously occurred, typically initiated by institutional traders or large market participants. These blocks represent areas of high interest, where large orders have been placed, leading to substantial shifts in market direction. When price revisits these areas, it often reacts due to the remaining unfilled orders, making order blocks key levels of support and resistance. Traders use them to anticipate price reversals or continuations, as they mark areas of potential buying (demand order blocks) or selling (supply order blocks) pressure.
Each order block displays two bars that represent the percentage breakdown of bullish and bearish volume within that block:
Bearish Volume (Red Bar): This bar indicates the percentage of volume that is bearish within the order block. A high percentage here suggests that a significant portion of selling activity occurred at this level, reinforcing the bearish sentiment in the order block. This could indicate strong resistance if the price revisits this zone, as sellers previously dominated this level.
Bullish Volume (Green Bar): This bar shows the percentage of volume that is bullish within the order block. A high percentage of bullish volume suggests strong buying interest at this level, indicating potential support if the price revisits this area. Buyers were previously active here, which could lead to a reaction if the market approaches this level again.
In practical terms, these volume bars help traders assess the strength of the order block:
High Bearish Volume in a Sell Block: Strengthens the potential resistance at that level.
High Bullish Volume in a Buy Block: Strengthens the potential support at that level.
This data allows traders to understand where significant buying or selling pressure has taken place and to anticipate potential market reactions when price re-enters these zones.
Total Volume with Percentage: Each order block shows the total trading volume within the block, along with the percentage this volume represents relative to all identified order blocks. For example, if an order block shows "45%," this means it holds 45% of the cumulative volume across all order blocks on the chart. Higher percentages indicate that this block contains a substantial portion of trading activity, potentially signaling a stronger support or resistance level.
Delta Volume: Delta volume measures the difference between buy and sell volume within the block. If the delta is positive (buy volume is higher than sell volume), it suggests bullish sentiment within the block, indicating potential support. Conversely, if the delta is negative (sell volume is higher than buy volume), it indicates bearish sentiment, suggesting resistance. Delta volume provides additional insight into market sentiment within each order block, helping traders anticipate possible price reactions.
Based on Total volume and delta volume order blocks are categorized into High, Balanced and Strong blocks for easy identification of significant levels
Usually all order blocks have two bars, but this type of OB additionaly have a third blue bar, which gives the traders more information about order block volume flow. Basically it's a statistical ranking volume model which scores order blocks by its volume and produce % bar from 0-100%
Blocks with a high percentage of total volume are likely to be more significant support or resistance levels. A strong order block with high bearish volume and negative delta (more selling) could act as a substantial resistance zone.
If an order block shows high total volume with a negative delta, it might indicate strong sell interest. This could suggest a reversal opportunity and move price down.
By analyzing the delta volume and total volume within order blocks, traders can make more informed decisions on where to enter or exit trades, knowing whether buying or selling pressure dominated at those levels.
The provided Order Blocks are designed to be cleaner in nature and more effective in their detection of key market levels. By analyzing volume and volatility, these Order Blocks aim to simulate and predict where large areas of market orders may rest. By forecasting these areas they give excellent support or resistance areas.
The Order Blocks settings help customize how order blocks (areas of institutional buying or selling) are displayed and analyzed on the chart. Here’s a breakdown of each option:
Enable Blocks: Turns the Order Block feature on or off.
Show Past: Specifies the number of historical order blocks to display. Useful for observing how past order blocks affected price.
Granularity: Filters the strength of the order blocks to display:
Weak, Balanced, High, Strong: Shows order blocks based on their strength, with “Strong” blocks being the most influential.
All: Displays all levels of order blocks, regardless of strength.
OB Type (Bearish, Bullish, All): Filters order blocks by type.
Bearish: Shows only bearish order blocks, useful for identifying potential resistance zones.
Bullish: Displays only bullish order blocks, indicating potential support.
All: Displays both types of order blocks.
Mitigation Method: Defines when an order block is considered “mitigated” or filled:
Touch: Counts as mitigated when price touches the order block.
Wicks: Considers wicks only to count a mitigation.
Close: Counts as mitigated if the body of the candle closes within the block.
Average: Uses an average price method for mitigation.
Timeframe: Selects the timeframe for displaying order blocks, which can either match the chart’s current timeframe or be set independently. Useful for multi-timeframe analysis.
Show Delta: Displays the difference between buying and selling volume within the order block, highlighting the strength of the buying or selling pressure.
Show Metrics: Shows additional data, like the total volume %.
Show Rating: Adds a strength rating to each order block, indicating how influential it might be based on volume and other factors. (Weak, Balanced, High, Strong)
Show Traded Volume: Displays the volume traded within each order block, helping gauge its potential impact on price.
Show Score Model: Uses a scoring model to rank order blocks by significance within a third bar.
Show Trading Activity: Highlights recent trading activity within the order block, useful for spotting fresh interest in the area.
These settings allow traders to adjust order block visibility, granularity, and additional metrics, offering flexibility for analyzing institutional buying and selling zones based on individual preferences and market conditions.
This information provides a comprehensive view of each order block's volume profile, giving traders insights into the strength of buying or selling interest, which can enhance trading precision when approaching key levels.
