If 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 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 engulfment does not necessarily mean a buy signal).
█ HOW TO INTERPRET?
1 • We use last detected 'Bearish/ Reversal 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/ Candle' as confirmation of entry point.
3 • You can play with the 'Maximum Volatility' value or the 'True Range' Multiplier value to filter detected 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 Candle and Crossing Lines.
-This script is not beginner's Level and is intended for Traders with advanced knowledge of Patterns and the work of Michael j. Huddleston on the OrderBlocks.
Good Trade everyone and remember, risk management remains the most important!
-Updated default settings.
-'Engulfing Candle' is now simply called 'Strong Engulfing'.
-Algorithm gas been improved and settings is more simpler to interpret now.
-Script is now using ATR instead of EMA to find Engulfing.
-Default Engulfing color has been set to Red for Bearish and Green for Bullish Engulfing.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.