OIf you follow my work closely, you know my obsession with OrderBlocks and Retracements. We will reuse the same logic, but using candle engulfments and candle engulfment reversals. It is the latter that we will interpret as OrderBlocks, and candle engulfments as buy or sell signals.Instead of using the price and the average of the candles, here we prefer to use 4 exponential moving averages over 4 different periods with a true range for detecting volatility and determining if a candle should be considered engulfed or not.
(note : if you know the principle of candle engulfment you should know that a bullish engulfment does not necessarily mean a buy signal).
1 • We use last detected ‘Bearish/ Bullish Reversal Engulfing Candle’ as an Retracement Level.
(Keep in mind Historical Retracements with extended lines is still useful and can still have an impact on the actual trend).
2 • We use ‘Bearish/Bullish Candle’ as confirmation of entry point.
3 • You can play with the ‘Maximum Volatility’ value or the ‘True Range’ Multiplier value to filter detected engulfing as you want.
4 • HTF and Auto HTF option available.
5 • Everything is customizable in settings (show inputs, colors, lines size etc…)
6 • Alerts is available for Engulfing Candle and Crossing Lines.
–NOTE : This script is not beginner’s Level and is intended for Traders with advanced knowledge of Candlestick Patterns and the work of Michael j. Huddleston on the OrderBlocks.
Next-Gen Engulfing Retracement in action on S&P500 Index.
Here is the complete list of features present in this indicator :
- Full Indicator Customization
- Engulfing Retracement and Labels
- Strong Engulfing Retracement and Labels
- Retracement lines automatically plotted when an Engulfment is detected until the line is cross.
- Full Range (High/Low) for Bearish/Bullish Retracement Lines
- Extend Lines option
- Last Retracement Lines Prices
- Wick – Zone Lines Type Choice
- Engulfing OB Labels with Price
This indicator contain Alerts, you can set them by choosing the ‘Any Alerts Function Call‘ to automatically configure them.
Or copy / paste the source code into your pine editor :
// This source code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © RickSimpson
//@version=5
indicator('Next-Gen Engulfing Retracement', 'Next-Gen Engulfing Retracement', overlay=true, max_bars_back=500, max_lines_count=500, max_labels_count=500)
/////////////////////////////////////
// Next-Gen Engulfing Retracement //
/////////////////////////////////////
//Groups Setup
groupcolor = "COLOR SETUP"
groupretracement = "RETRACEMENT LINES SETTINGS"
groupengulfing = "ENGULFING SETTINGS"
groupalert = "ALERTS SETUP"
//Customization Inputs
bearishengulfingcolor = input.color(color.red, 'Bearish Engulfing Color', group=groupcolor)
bullishengulfingcolor = input.color(color.green, 'Bullish engulfing Color', group=groupcolor)
//Inputs
showstrong = input.bool(true, 'Show Strong Engulfing Retracements?', group=groupretracement)
show = input.bool(true, 'Show Engulfing Retracements?', group=groupretracement)
maxlines = input.int(10, 'Maximum Lines', minval=1, maxval=500, group=groupretracement, inline='lines')
layout = input.string('Wick', 'Lines Type', options=['Wick', 'Zone'], group=groupretracement, inline='lines')
linessize = input.int(1, 'Lines Width ', minval=1, maxval=3, group=groupretracement, inline='lines style')
linestyle = input.string('Dotted', 'Lines Style', options=['Solid', 'Dotted', 'Dashed'], group=groupretracement, inline='lines style')
extend = input.bool(false, 'Extend Lines?', group=groupretracement, inline='lines style')
showengulfing = input.bool(true, 'Strong Engulfing Labels?', group=groupengulfing)
showallengulfing = input.bool(false, 'Engulfing Labels?', group=groupengulfing)
engulfingalerts = input.bool(true, 'Enable Engulfing Candles Alerts?', group=groupalert)
crossingalerts = input.bool(true, 'Enable Retracement Lines Crossing Alerts?', group=groupalert)
//Price Variables Declaration
open_ = open
high_ = high
low_ = low
close_ = close
bar_index_ = bar_index
//Color Call Function
fzonecolor(obcolor, _call) =>
c1 = color.r(obcolor)
c2 = color.g(obcolor)
c3 = color.b(obcolor)
color.rgb(c1, c2, c3, _call)
//Round Function
round_f(x) =>
math.round(x / syminfo.mintick) * syminfo.mintick
//Truncated Percentile Function
percent_1(x, y) =>
z = x * 100 / y
z
//Lines Styles String Function
f_linestyle(_style) =>
_style == 'Solid' ? line.style_solid : _style == 'Dotted' ? line.style_dotted : line.style_dashed
//Directions Variables Declaration
beardir = close < open
bulldir = close > open
//Body Candle Size Calculation
body = math.abs(close - open)
//Momentum Calculation
math = math.max(high - low, math.abs(high - close[1]), math.abs(low - close[1]))
//Average True Range Built-in Function
atr = ta.atr(100)
//Engulfment Size Calculation
bodysizetop = atr * 1.1
bodysizebottom = atr / 3
smallbodysizetop = atr / 3
smallbodysizebottom = atr / 8
//Engulfment Conditions
bodyengulfing = body > bodysizebottom and body < bodysizetop
smallbodyengulfing = body > smallbodysizebottom and body < smallbodysizetop
//Engulfing Calculation
bearengulfing = (smallbodyengulfing[1] or bodyengulfing[1]) and bulldir[1] and beardir and open[1] > close
bullengulfing = (smallbodyengulfing[1] or bodyengulfing[1]) and beardir[1] and bulldir and close > open[1]
//Boolean Conditions to Float
var float bearengulfingprice = na
if bearengulfing
bearengulfingprice := high
bearengulfingprice
var float bullengulfingprice = na
if bullengulfing
bullengulfingprice := low
bullengulfingprice
if showallengulfing
l = ta.change(bearengulfingprice) ? label.new(bar_index_, bearengulfingprice[1] + 0.01, str.tostring(round_f(bearengulfingprice)), color=color.new(bearishengulfingcolor, 100), textcolor=bearishengulfingcolor, style=label.style_label_down, yloc=yloc.abovebar, size=size.small) : ta.change(bullengulfingprice) ? label.new(bar_index_, bullengulfingprice[1] - 0.01, str.tostring(round_f(bullengulfingprice)), color=color.new(bullishengulfingcolor, 100), textcolor=bullishengulfingcolor, style=label.style_label_up, yloc=yloc.belowbar, size=size.small) : na
l
//Strong Engulfing Calculation
strongbearengulfing = beardir[2] and bullengulfing[1] and bearengulfing
strongbullengulfing = bulldir[2] and bearengulfing[1] and bullengulfing
//Boolean Conditions to Float
var float strongbearengulfingprice = na
if strongbearengulfing
strongbearengulfingprice := high
strongbearengulfingprice
var float strongbullengulfingprice = na
if strongbullengulfing
strongbullengulfingprice := low
strongbullengulfingprice
if showengulfing
l = ta.change(strongbearengulfingprice) ? label.new(bar_index_, strongbearengulfingprice[1] + 0.01, str.tostring(round_f(strongbearengulfingprice)), color=color.new(bearishengulfingcolor, 100), textcolor=bearishengulfingcolor, style=label.style_label_down, yloc=yloc.abovebar, size=size.small) : ta.change(strongbullengulfingprice) ? label.new(bar_index_, strongbullengulfingprice[1] - 0.01, str.tostring(round_f(strongbullengulfingprice)), color=color.new(bullishengulfingcolor, 100), textcolor=bullishengulfingcolor, style=label.style_label_up, yloc=yloc.belowbar, size=size.small) : na
l
//Plotting
plotshape(strongbearengulfing, title='Strong Bearish Engulfing', text=' ', color=bearishengulfingcolor, style=shape.triangledown, location=location.abovebar, size=size.small)
barcolor(beardir[2] and bullengulfing[1] and bearengulfing ? bearishengulfingcolor : na)
plotshape(strongbullengulfing, title='Strong Bullish Engulfing', text=' ', color=bullishengulfingcolor, style=shape.triangleup, location=location.belowbar, size=size.small)
barcolor(bulldir[2] and bearengulfing[1] and bullengulfing ? bullishengulfingcolor : na)
plotshape(showallengulfing ? bearengulfing : na, title= "Bearish Engulfing", color=bearishengulfingcolor, text=' ', textcolor=bearishengulfingcolor, style=shape.arrowdown, location=location.abovebar, size=size.tiny)
plotshape(showallengulfing ? bullengulfing : na, title= "Bullish Engulfing", color=bullishengulfingcolor, text=' ', textcolor=bullishengulfingcolor, style=shape.arrowup, location=location.belowbar, size=size.tiny)
//Alerts
if engulfingalerts and strongbearengulfing == 1
alert('Strong Bearish Engulfing Detected! At ' + str.tostring(strongbearengulfingprice), alert.freq_once_per_bar)
if engulfingalerts and strongbullengulfing == 1
alert('Strong Bullish Engulfing Detected! At ' + str.tostring(strongbullengulfingprice), alert.freq_once_per_bar)
if engulfingalerts and bearengulfing == 1
alert('Bearish Engulfing Detected! At ' + str.tostring(bearengulfingprice), alert.freq_once_per_bar)
if engulfingalerts and bullengulfing == 1
alert('Bullish Engulfing Detected! At ' + str.tostring(bullengulfingprice), alert.freq_once_per_bar)
//Retracement Lines Variables Declaration
var int numberofline = maxlines
var float upperphzone = na
var float upperplzone = na
var float lowerphzone = na
var float lowerplzone = na
var line[] upperphzonearr = array.new_line(0, na)
var line[] upperplzonearr = array.new_line(0, na)
var line[] lowerphzonearr = array.new_line(0, na)
var line[] lowerplzonearr = array.new_line(0, na)
var line upperphzoneline = na
var line upperplzoneline = na
var line lowerphzoneline = na
var line lowerplzoneline = na
var bool[] upperzonetestedarr = array.new_bool(0, false)
var bool[] lowerzonetestedarr = array.new_bool(0, false)
var bool upperzonetested = false
var bool lowerzonetested = false
var bool nobool = true
var bool showprice = true
var color upperzonecolor = bearishengulfingcolor
var color lowerzonecolor = bullishengulfingcolor
var label[] labelpharr = array.new_label(0, na)
var label[] labelplarr = array.new_label(0, na)
var label labelph = na
var label labelpl = na
var int numberofline2 = maxlines
var float upperphzone2 = na
var float upperplzone2 = na
var float lowerphzone2 = na
var float lowerplzone2 = na
var line[] upperphzonearr2 = array.new_line(0, na)
var line[] upperplzonearr2 = array.new_line(0, na)
var line[] lowerphzonearr2 = array.new_line(0, na)
var line[] lowerplzonearr2 = array.new_line(0, na)
var line upperphzoneline2 = na
var line upperplzoneline2 = na
var line lowerphzoneline2 = na
var line lowerplzoneline2 = na
var bool[] upperzonetestedarr2 = array.new_bool(0, false)
var bool[] lowerzonetestedarr2 = array.new_bool(0, false)
var bool upperzonetested2 = false
var bool lowerzonetested2 = false
var bool nobool2 = true
var color upperzonecolor2 = bearishengulfingcolor
var color lowerzonecolor2 = bullishengulfingcolor
var string stronglinestyle = 'Solid'
var label[] labelpharr2 = array.new_label(0, na)
var label[] labelplarr2 = array.new_label(0, na)
var label labelph2 = na
var label labelpl2 = na
//Strong Bearish Engulfing Retracement Lines Calculation
if showstrong and strongbearengulfing
upperphzone := high_
upperplzone := close_ < open_ ? close_ : open_
upperplzoneline := layout == 'Zone' ? line.new(bar_index_, upperplzone, bar_index, upperplzone, width=linessize) : na
upperphzoneline := nobool ? line.new(bar_index_, upperphzone, bar_index, upperphzone, width=linessize) : line.new(bar_index_, (upperphzone + upperplzone) / 2, bar_index, (upperphzone + upperplzone) / 2, width=linessize)
labelph := showprice ? label.new(bar_index_, nobool ? upperphzone : (upperphzone + upperplzone) / 2, text=str.tostring(bar_index - bar_index_), textcolor=upperzonecolor, style=label.style_none) : na
if array.size(upperphzonearr) > numberofline
line.delete(array.shift(upperphzonearr))
line.delete(array.shift(upperplzonearr))
array.shift(upperzonetestedarr)
label.delete(array.shift(labelpharr))
array.push(upperphzonearr, upperphzoneline)
array.push(upperplzonearr, upperplzoneline)
array.push(upperzonetestedarr, extend ? true : false)
array.push(labelpharr, labelph)
if array.size(upperplzonearr) > 0
for i = 0 to array.size(upperplzonearr) - 1 by 1
line tempupperline = array.get(upperphzonearr, i)
line templowerline = array.get(upperplzonearr, i)
label linepricelabel = array.get(labelpharr, i)
bool tested = array.get(upperzonetestedarr, i)
line.set_style(tempupperline, f_linestyle(stronglinestyle))
line.set_style(templowerline, f_linestyle(stronglinestyle))
line.set_color(tempupperline, color.from_gradient(i, 1, numberofline, fzonecolor(upperzonecolor, 00), fzonecolor(upperzonecolor, 00)))
line.set_color(templowerline, color.from_gradient(i, 1, numberofline, fzonecolor(upperzonecolor, 00), fzonecolor(upperzonecolor, 00)))
label.set_textcolor(linepricelabel, color.from_gradient(i, 1, numberofline, fzonecolor(upperzonecolor, 00), upperzonecolor))
label.set_text(linepricelabel, str.tostring(round_f(line.get_y1(tempupperline))))
label.set_text(linepricelabel, ' Bearish Engulfing - ' + str.tostring(round_f(line.get_y1(tempupperline))))
label.set_x(linepricelabel, bar_index)
crossed = high > line.get_y1(tempupperline)
if crossed and not tested
array.set(upperzonetestedarr, i, true)
label.delete(linepricelabel)
if crossingalerts and crossed and not tested
array.set(upperzonetestedarr, i, true)
label.delete(linepricelabel)
alert('Strong Bearish Engulfing Line Has Been Crossed! At ' + str.tostring(close), alert.freq_once_per_bar)
else if extend ? tested : not tested
line.set_x2(tempupperline, bar_index)
array.set(upperphzonearr, i, tempupperline)
line.set_x2(templowerline, bar_index)
array.set(upperplzonearr, i, templowerline)
//Strong Bullish Engulfing Retracement Lines Calculation
if showstrong and strongbullengulfing
lowerplzone := low_
lowerphzone := close_ < open_ ? open_ : close_
lowerphzoneline := layout == 'Zone' ? line.new(bar_index_, lowerphzone, bar_index, lowerphzone, width=linessize) : na
lowerplzoneline := nobool ? line.new(bar_index_, lowerplzone, bar_index, lowerplzone, width=linessize) : line.new(bar_index_, (lowerphzone + lowerplzone) / 2, bar_index, (lowerphzone + lowerplzone) / 2, width=linessize)
labelpl := showprice ? label.new(bar_index_, nobool ? lowerplzone : (lowerphzone + lowerplzone) / 2, text=str.tostring(bar_index - bar_index_), textcolor=lowerzonecolor, style=label.style_none) : na
if array.size(lowerphzonearr) > numberofline
line.delete(array.shift(lowerphzonearr))
line.delete(array.shift(lowerplzonearr))
array.shift(lowerzonetestedarr)
label.delete(array.shift(labelplarr))
array.push(lowerphzonearr, lowerphzoneline)
array.push(lowerplzonearr, lowerplzoneline)
array.push(lowerzonetestedarr, extend ? true : false)
array.push(labelplarr, labelpl)
if array.size(lowerplzonearr) > 0
for i = 0 to array.size(lowerplzonearr) - 1 by 1
line tempupperline = array.get(lowerphzonearr, i)
line templowerline = array.get(lowerplzonearr, i)
label linepricelabel = array.get(labelplarr, i)
bool tested = array.get(lowerzonetestedarr, i)
line.set_style(tempupperline, f_linestyle(stronglinestyle))
line.set_style(templowerline, f_linestyle(stronglinestyle))
line.set_color(tempupperline, color.from_gradient(i, 1, numberofline, fzonecolor(lowerzonecolor, 00), fzonecolor(lowerzonecolor, 00)))
line.set_color(templowerline, color.from_gradient(i, 1, numberofline, fzonecolor(lowerzonecolor, 00), fzonecolor(lowerzonecolor, 00)))
label.set_textcolor(linepricelabel, color.from_gradient(i, 1, numberofline, fzonecolor(lowerzonecolor, 00), lowerzonecolor))
label.set_text(linepricelabel, str.tostring(round_f(line.get_y1(templowerline))))
label.set_text(linepricelabel, ' Bullish Engulfing - ' + str.tostring(round_f(line.get_y1(templowerline))))
label.set_x(linepricelabel, bar_index)
crossed = low < line.get_y1(templowerline)
if crossed and not tested
array.set(lowerzonetestedarr, i, true)
label.delete(linepricelabel)
if crossingalerts and crossed and not tested
array.set(lowerzonetestedarr, i, true)
label.delete(linepricelabel)
alert('Strong Bullish Engulfing Line Has Been Crossed! At ' + str.tostring(close), alert.freq_once_per_bar)
else if extend ? tested : not tested
line.set_x2(tempupperline, bar_index)
array.set(lowerphzonearr, i, tempupperline)
line.set_x2(templowerline, bar_index)
array.set(lowerplzonearr, i, templowerline)
//Bearish Engulfing Retracement Lines Calculation
if show and bearengulfing
upperphzone2 := high_
upperplzone2 := close_ < open_ ? close_ : open_
upperplzoneline2 := layout == 'Zone' ? line.new(bar_index_, upperplzone2, bar_index, upperplzone2, width=linessize) : na
upperphzoneline2 := nobool ? line.new(bar_index_, upperphzone2, bar_index, upperphzone2, width=linessize) : line.new(bar_index_, (upperphzone2 + upperplzone2) / 2, bar_index, (upperphzone2 + upperplzone2) / 2, width=linessize)
labelph2 := showprice ? label.new(bar_index_, nobool ? upperphzone2 : (upperphzone2 + upperplzone2) / 2, text=str.tostring(bar_index - bar_index_), textcolor=upperzonecolor2, style=label.style_none) : na
if array.size(upperphzonearr2) > numberofline2
line.delete(array.shift(upperphzonearr2))
line.delete(array.shift(upperplzonearr2))
array.shift(upperzonetestedarr2)
label.delete(array.shift(labelpharr2))
array.push(upperphzonearr2, upperphzoneline2)
array.push(upperplzonearr2, upperplzoneline2)
array.push(upperzonetestedarr2, extend ? true : false)
array.push(labelpharr2, labelph2)
if array.size(upperplzonearr2) > 0
for i = 0 to array.size(upperplzonearr2) - 1 by 1
line tempupperline2 = array.get(upperphzonearr2, i)
line templowerline2 = array.get(upperplzonearr2, i)
label linepricelabel2 = array.get(labelpharr2, i)
bool tested2 = array.get(upperzonetestedarr2, i)
line.set_style(tempupperline2, f_linestyle(linestyle))
line.set_style(templowerline2, f_linestyle(linestyle))
line.set_color(tempupperline2, color.from_gradient(i, 1, numberofline2, fzonecolor(upperzonecolor2, 00), fzonecolor(upperzonecolor2, 00)))
line.set_color(templowerline2, color.from_gradient(i, 1, numberofline2, fzonecolor(upperzonecolor2, 00), fzonecolor(upperzonecolor2, 00)))
label.set_textcolor(linepricelabel2, color.from_gradient(i, 1, numberofline2, fzonecolor(upperzonecolor2, 00), upperzonecolor2))
label.set_text(linepricelabel2, str.tostring(round_f(line.get_y1(tempupperline2))))
label.set_text(linepricelabel2, ' Bearish Engulfing - ' + str.tostring(round_f(line.get_y1(tempupperline2))))
label.set_x(linepricelabel2, bar_index)
crossed = high > line.get_y1(tempupperline2)
if crossed and not tested2
array.set(upperzonetestedarr2, i, true)
label.delete(linepricelabel2)
if crossingalerts and crossed and not tested2
array.set(upperzonetestedarr2, i, true)
label.delete(linepricelabel2)
alert('Bearish Engulfing Line Has Been Crossed! At ' + str.tostring(close), alert.freq_once_per_bar)
else if extend ? tested2 : not tested2
line.set_x2(tempupperline2, bar_index)
array.set(upperphzonearr2, i, tempupperline2)
line.set_x2(templowerline2, bar_index)
array.set(upperplzonearr2, i, templowerline2)
//Bullish Engulfing Retracement Lines Calculation
if show and bullengulfing
lowerplzone2 := low_
lowerphzone2 := close_ < open_ ? open_ : close_
lowerphzoneline2 := layout == 'Zone' ? line.new(bar_index_, lowerphzone2, bar_index, lowerphzone2, width=linessize) : na
lowerplzoneline2 := nobool ? line.new(bar_index_, lowerplzone2, bar_index, lowerplzone2, width=linessize) : line.new(bar_index_, (lowerphzone2 + lowerplzone2) / 2, bar_index, (lowerphzone2 + lowerplzone2) / 2, width=linessize)
labelpl2 := showprice ? label.new(bar_index_, nobool ? lowerplzone2 : (lowerphzone2 + lowerplzone2) / 2, text=str.tostring(bar_index - bar_index_), textcolor=lowerzonecolor2, style=label.style_none) : na
if array.size(lowerphzonearr2) > numberofline2
line.delete(array.shift(lowerphzonearr2))
line.delete(array.shift(lowerplzonearr2))
array.shift(lowerzonetestedarr2)
label.delete(array.shift(labelplarr2))
array.push(lowerphzonearr2, lowerphzoneline2)
array.push(lowerplzonearr2, lowerplzoneline2)
array.push(lowerzonetestedarr2, extend ? true : false)
array.push(labelplarr2, labelpl2)
if array.size(lowerplzonearr2) > 0
for i = 0 to array.size(lowerplzonearr2) - 1 by 1
line tempupperline2 = array.get(lowerphzonearr2, i)
line templowerline2 = array.get(lowerplzonearr2, i)
label linepricelabel2 = array.get(labelplarr2, i)
bool tested2 = array.get(lowerzonetestedarr2, i)
line.set_style(tempupperline2, f_linestyle(linestyle))
line.set_style(templowerline2, f_linestyle(linestyle))
line.set_color(tempupperline2, color.from_gradient(i, 1, numberofline2, fzonecolor(lowerzonecolor2, 00), fzonecolor(lowerzonecolor2, 00)))
line.set_color(templowerline2, color.from_gradient(i, 1, numberofline2, fzonecolor(lowerzonecolor2, 00), fzonecolor(lowerzonecolor2, 00)))
label.set_textcolor(linepricelabel2, color.from_gradient(i, 1, numberofline2, fzonecolor(lowerzonecolor2, 00), lowerzonecolor2))
label.set_text(linepricelabel2, str.tostring(round_f(line.get_y1(templowerline2))))
label.set_text(linepricelabel2, ' Bullish Engulfing - ' + str.tostring(round_f(line.get_y1(templowerline2))))
label.set_x(linepricelabel2, bar_index)
crossed = low < line.get_y1(templowerline2)
if crossed and not tested2
array.set(lowerzonetestedarr2, i, true)
label.delete(linepricelabel2)
if crossingalerts and crossed and not tested2
array.set(lowerzonetestedarr2, i, true)
label.delete(linepricelabel2)
alert('Bullish Engulfing Line Has Been Crossed! At ' + str.tostring(close), alert.freq_once_per_bar)
else if extend ? tested2 : not tested2
line.set_x2(tempupperline2, bar_index)
array.set(lowerphzonearr2, i, tempupperline2)
line.set_x2(templowerline2, bar_index)
array.set(lowerplzonearr2, i, templowerline2)The content covered on this website is NOT investment advice and I am not a financial advisor.