RSI Support & Resistance Breakouts with Orderblocks

8 Apr

This tool is an overly simplified method of finding market squeeze and breakout completely based on a dynamic RSI calculation. It is designed to draw out areas of price levels where the market is pushing back against price action leaving behind instances of short term support and resistance levels you otherwise wouldn't see with the common RSI.

It uses the changes in market momentum to determine support and resistance levels in real time while offering price zone where order blocks exist in the short term.

In ranging markets we need to know a couple things.
1. External Zone - It's important to know where the highs and lows were left behind as they hold liquidity. Here you will have later price swings and more false breakouts.

2. Internal Zone - It's important to know where the highest and lowest closing values were so we can see the limitations of that squeeze. Here you will find the stronger cluster of orders often seen as orderblocks.

In this tool I've added a 200 period Smoothed Moving Average as a trend filter which causes the RSI calculation to change dynamically.


Regular Zones - without extending
The Zones draw out automatically but are often too small to work with.


To solve this problem, you can extend the zones into the future up to 40 bars.
This allows for more visibility against future price action.

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Two Types of Zones

External Zones - These zones give you positioning of the highest and lowest price traded within the ranging market. This is where liquidity will be swept and often is an ultimate breaking point for new price swings.

How to use them:
External Zones - External zones form at the top of a pullback. After this price should move back into its impulsive wave.
During the next corrective way, if price breaches the top of the previous External Zone, this is a sign of trend weakness. Expect a divergence and trend reversal.


Internal Zones - (OrderBlocks) Current price will move in relation to previous internal zones. The internal zone is where a majority of price action and trading took place. It's a stronger SQUEEZE area. Current price action will often have a hard time closing beyond the previous Internal Zones high or low. You can expect these zones to show you where the market will flip over. In these same internal zones you'll find large rejection candles.

**Important Note** Size Doesn't Matter
The size of the internal zone does not matter. It can be very small and still very powerful.
Once an internal zone has been hit a few times, its often not relevant any longer.

Order Block Zone Examples

In this image you can see the Internal Zone that was untouched had a STRONG price reaction later on.
Internal Zones that were touched multiple times had weak reactions later as price respected them less over time.

Zone Overlay Breakdown

The Zones form and update in real time until momentum has picked up and price begins to trend. However it leaves behind the elements of the inducement area and all the key levels you need to know about for future price action.

Resistance Fakeout: Later on after the zone has formed, price will return to this upper zone of price levels and cause fakeouts. A close above this zone implies the market moves long again.

Midline Equilibrium: This is simply the center of the strongest traded area. We can call this the Point of Control within the orderblock. If price expands through both extremes of this zone multiple times in the future, it eliminates the orderblock.

Support Fakeout: Just like its opposing brother, price will wick through this zone and rip back causing inducement to trap traders. You would need a clear close below this zone to be in a bearish trend.

BARCOLOR or Candle Color: (Optional)
Bars are colored under three conditions
Bullish Color = A confirmed bullish breakout of the range.
Bearish Color = A confirmed bearish breakout of the range.
Squeeze Color = Even if no box is formed a candle or candles can have a squeeze color. This means the ranging market happened within the high and low of that singular candle.

9 Apr

Nota Keluaran

Updated Zone Extensions.
Orderblock Zone and Range Zone now have their own separate extension inputs.

1. Orderblocks extend up to 40 bars in to future price.
   
2. Ranges extend up to 80 bars in to future price.
   

9 Apr

Nota Keluaran

Orderblocks can ONLY exist inside of a ranging of squeezing market.
***Well not (ONLY) but this is where the best ones are***
This update filters out the amount of Ranges that were previously drawn on the chart.
Now you will only see Ranges that have an orderblock existing inside of it.

10 Apr

Nota Keluaran

Minor Update:

• Updated the minimum value of the RSI. It can not be less than 4.