The TradesAI tool is powered by a sophisticated technical analysis element known as Order Blocks (OB) and Reversal Order Blocks (ROB) , designed to identify key zones of support and resistance on trading charts where liquidity is concentrated, often referred to as "potential institutional interest zones". This tool forms part of our Elite Indicator, found on TradingView.
Understanding Order Blocks and Reversal Order Blocks
Order Blocks are pivotal areas on a chart where significant buying or selling activity has occurred, often marked by a consolidation phase followed by a strong directional price move. These zones, known as Order Blocks, act as crucial support or resistance levels in future price movements, attracting traders' attention due to their potential impact on market dynamics.
A bullish Order Block, also referred to as a Valley-OB, represents the last bearish candle in a downtrend before a sequence of bullish candles, forming a "Valley." Conversely, a bearish Order Block, known as a Peak-OB, is the last bullish candle in an uptrend before a sequence of bearish candles, forming a "Peak".
The TradesAI indicator goes beyond merely marking the last candle in an Order Block; it captures the full range zones of the OB by considering the sequence of same-type candles immediately adjacent to it. This comprehensive approach, known as the "OB/ROB Zone," provides traders with a nuanced understanding of these critical levels for potential entries or exits.
Unique Features of the TradesAI Indicator
The TradesAI tool stands out by offering a smart tracking algorithm that dynamically removes irrelevant levels and monitors OBs/ROBs candle by candle to update them based on testing and validation criteria. This real-time monitoring ensures that traders have accurate and up-to-date information on these key zones.
Moreover, the indicator follows a concept of "Zone Activation" to determine whether to mark zones with dashed or solid lines, providing traders with visual cues on the strength and relevance of these levels.
Utilizing Order Blocks in Trading Strategies
Traders can leverage Order Blocks and Reversal Order Blocks as essential components of their trading strategies. These zones serve as decision-making points for traders, offering insights into potential entry or exit points based on price reactions near these marked areas.
The indicator's ability to color-code these zones based on their status, whether tested or untested, enhances traders' interpretation and decision-making process. By combining Order Blocks with trendlines, traders can further strengthen their trade setups, as the intersection points of horizontal Order Blocks and diagonal trendlines provide additional confluence and reliability in trading signals.
Conclusion
In conclusion, the TradesAI Order Block (OB) and Reversal Order Block (ROB) indicator plays a crucial role in identifying key support and resistance levels on charts, where liquidity is concentrated. By understanding and effectively utilizing these zones, traders can enhance their trading strategies, improve decision-making, and increase the probability of successful trades.
The best part? The combination of Order Blocks with TradesAI’s Trendlines and Market Structure Breakout (MSB) offers traders a comprehensive approach to analyzing market dynamics and making informed trading decisions, ultimately leading to more confident and successful trading outcomes.
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