What is an OrderBlock? It is simply Price where Banks (or Large Financial Entities) have Bought
or Sold heavily (Support or Resistance Institutional Zone). Our job as a trader is to monitor
what the Banks and/or Large Investors are doing then patiently wait and have the opportunity
to surf in their direction. Large Financial Entities Buy during Price drops to get the best
purchase Price. The Bank are acting a bit like us in our everyday life, when we want Buying
something, we always try to Buy it at the best price. And when we Sell, take the example of
a used Car, we will systematically try to Sell it at the highest possible Price.
The Price of convertible Cars goes down during the Winter and goes up during the Summer.
So to make the best operation, if you Buy a second-hand convertible you will prefer to Buy it
during the Winter and Sell it immediately in the Summer and not Vice versa. So the way
Large Institution act is exactly the same, it will expect the Price to Buy the fall and they will wait
until the Price rises in order to Sell. This is how the Profits will be made. The mistake that many
Traders makes when they Trade emotionally is to act in the opposite way of what they will do
in everyday life. When we trade emotionally, we see the Price fall, instead of Buying while
the Price drops we Sell. In a similar emotional based act when the Price goes up we Buy,
while when the Price goes up it’s the best opportunity to Sell. So all the big moves that you can
watch on your different Instruments are the result of Banks or other Large Financial Entities.
As Individuals, we do not have the necessary “Strike Force” to create this type of movement.
However, it is important to note that when Banks or Large Entities create this type of movement,
they do so despite theirs willing, they would love to be able to hide but luckily for us they can’t.
When Billions of Dollars are Invested in Trades, the effect can’t be concealed and as a result we will observe the impact on the market then as an Individual we’ll be able to see that on our Charts.There are many ways to locate these areas of interest. But as they say, all Roads lead to Rome. The purpose remains the Price Study and in particular the movements of strong amplitude on the Chart. Large Financial Entities will keep acting in the same Price areas, Or at least we can say that there’s a high probability for them to intervene in these zones. Therefore, rather than chasing the Price moves and then to endure a counter move, we will patiently wait until the Price returns to these areas on the basis that Banks and, or Large Entities will accumulate on their Positions and are going to Sell and Buy in the same Price areas. Keep in mind that this logic works no matter what TimeFrame is used. However when the have Analysis on Small TimeFrame (between M15 and H1) will make the movements observed between 20 and 50 Pips. Whereas if we look at H4 or Daily, we can really see movements of 100 or even 200 Pips.
The ZigZag Indicator is used to illustrate Trend Lines without taking into account intermediate Retracements. In a way, it allows you to get to the point by giving a simplified view of the
evolution of Prices by eliminating “parasitic” movements, and thus to Position and unwind
Positions at the appropriate times. It is part of the category of Trend Indicators. We will simply
define a Level of Price variation below which they will not be taken into account by the indicator.
This will eliminate all minor fluctuations, depending on the desired sensitivity. The Indicator can
only have 2 directions, Up or Down. For example, setting the Indicator to 5% (ZigZag Length)
will eliminate all variations below 5%. If the Trend is Bullish and the Indicator therefore oriented in
the same direction, Prices will have to fall by at least 5% for the direction of the ZigZag to reverse Downward. Why using ZigZag to search for our OrderBlock? ZigZag makes it possible to clearly
identify the current Trend as well as significant Reversals and therefore have a much clearer
vision of the actions carried out by Banks/Large Entities. However, it is drawn up a posteriori and
therefore does not make it possible to predict the evolution of Prices. The turning points are
Indicated with a delay proportional to the chosen sensitivity. The indicator calculates
the Lowest Price over the given Period and eliminates Prices that are below the minimum
requested Array Size. Then, it calculates the Highest Price over the given Period and eliminates
the Prices that are below the minimum requested Array Size. Finally, it draws the Trend Lines that connects the High and Low points determined previously and use the sum of the two to
determinate the Range area.
• The Indicator creates Lines that demonstrate past Retracements and current Pivots Levels to get a clearer view of the next Retracement area using the Lines from the Last High and Low Pivots to
determine which Take-Profit or Stop-Loss set.
• The “OrderBlocks” are detected based on the Pivots founds. You can display the Prices and use
theses to help you set your Take-Profit during Retracement.
• Possibility to display the Levels of detected Pivots point. This can permit to dispense with the use of Eliott Waves or the use of a Fibonacci.
• Donchian ZigZag Channels option to be sure to always have seen the extremities of the Top, Bottom
and Range area.
• 4 ZigZag available with Length set to 5, 8, 13 and 21 by default. You will have to adjust them
according to selected TimeFrame or Financial Instrument used.
• The ZigZag has 3 adjustable colors :
- -Green = Bullish Trend
- -Red = Bearish Trend
- -Orange = Range Zone
It is not advisable to enter Position when an ZigZag color indicates a Range Zone.
ZigZag OrderBlock Retracement in action on S&P500 Index.
Here is the complete list of indicators present in this indicator :
- Retracement Lines according to detected OrderBlocks
- 4 ZigZag with editable Length for each
- Harmonic Patterns
- Projections Forecast
- Cloud Channels
- Pivots point with Displayed Levels
- Linear Regression Filter
- Alerts : Following the request of many users on our other script concerning the late arrival of Alerts for detected OrderBlocks (on Institutional OrderBlock Pressure), we fixed this problem here with the arrival INSTANT and CONFIRMED ALERTS.
Everything is customizable. You have the possibility to put alerts which will notify you when an indicator gives a new signal. For this, we have united all the alerts in one thanks to the “Any Alert Function Call” option, simply activate or deactivate the options you want to have in your alerts options before placing the alert.
The content covered on this website is NOT investment advice and I am not a financial advisor.