An expansion candle, also called displacement, is a candle that moves so far so fast that it leaves the candles before it behind. A supply or demand zone is the quiet patch a strong move like that started from.
The expansion candle block
You choose how many candles the move is measured over, from two to ten, counting the oldest and the newest. The block fires at the close of the newest candle when it has left the oldest one behind entirely:
- Up (a long): the newest candle's low is above the oldest candle's high.
- Down (a short): the newest candle's high is below the oldest candle's low.
Over three candles, this is exactly a fair value gap: nothing traded between the first and third candles.
You can add three floors on the newest candle. Each one left empty means no floor.
- Smallest body, in ticks.
- Smallest move, in ticks, from the oldest candle's edge to the newest candle's close.
- Largest wick against the move, as a multiple of the body: for an upward move, the lower wick.
A body or move of a whole number of ticks is measured as exactly that many ticks.
The supply and demand zone block
This block reads a zone in three steps, on the timeframe you name.
- Base candles. A base candle is a small one: its body is at most a percentage of its range that you set.
- The departure. A departure is a strong candle: its body is at least a percentage of its range that you set. It must also close beyond the run of base candles right before it: above their highest high, closing up, for a demand zone, or below their lowest low, closing down, for a supply zone.
- The zone. The run of base candles must be at least one candle and no longer than a number you set. The zone is the base's whole range, wick to wick, or only its bodies, as you choose.
The block fires when a later candle reaches back to the zone without closing through its far side: a long from a demand zone, a short from a supply zone. Each zone fires once. A candle that closes through the far side ends the zone, and a zone that is not revisited is forgotten after the number of candles you set.
Where the stop goes
- The far side, the middle, and the pattern's extreme. On the expansion block: the oldest candle's edge the move left behind, the middle of the space between the two candles, or the lowest low or highest high of all the candles. On the zone block: the zone's far side, its middle, or the low or high of the candle that came back.
- A swing window. The lowest low or highest high of a number of candles you state.
You can add a buffer of ticks beyond any of them.
What can go wrong
People draw supply and demand zones in different ways. This block draws them only as described above, so read the rule before comparing it with a chart marked by hand.
Both blocks take candles across a market closure, such as a weekend, as they take any others.