Hi, Nicolas. Thank you for your interest and help. I will try to provide such a definition here. Let me know if it is poorly defined. I’m continuing to look up different ways of drawing S+D zones.
Defining the base of consolidation (a series of candles trading in a tight range relative to the breakout candle):
Looking at a certain candlestick (C), look back and define X set of previous contiguous candles that are in total sufficiently smaller than C (“smaller” defined as X set open/close range is Y% of C; e.g. 50% or .5); stop looking back when X open/close range exceeds Y%. If X >= threshold value set by user, draw a zone. (i.e. user filters out less significant zones) This should draw multiple S+D zones for multiple candles C, not just a most recent one.
Defining first height H1 of S+D zone rectangle:
From the X candles, choose the most recent candle (D) with up/down direction opposite of C. S+D zone first height is set by D’s opening value.
Defining second height H2 of S+D zone rectangle:
Within user-defined Z number of candles to look back, if C is up, find the lowest low of Z. If C is down, find the highest high of Z. (Z should be >= X) S+D zone second height is this value of lowest low or highest high.
Defining first x coordinate of rectangle:
It is the earliest/oldest of the two heights.
Defining the second x coordinate of rectangle:
Continues to current candle
Color conditions for the S+D zone:
If H2 is < H1, color as “demand” zone for buying (green?).
If H2 is > H1, color as “supply” zone for selling (red?).
If a candle after C touches the zone such that (high/low/close) falls between H1 and H2, color zone as gray.
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