Engulfing Breakout Structure

Engulfing Breakout Structure (EBS)
"Identify High-Probability Market Structures, Not Just Patterns."

The Engulfing Breakout Structure (EBS) is a professional-grade analysis tool designed to filter market noise and identify the true origins of significant price movements. While standard Engulfing patterns occur frequently, many lead to "fakeouts" within a range. EBS solves this by treating an engulfing candle as a potential "structure" that is only validated once a decisive Break-away occurs.

How it Works: The EBS Logic
Unlike traditional indicators that plot signals immediately, EBS follows a strict confirmation process:

1. Structure Formation (Invisible): The script internally tracks "Candidate" engulfing candles.
   
2. Break-away Validation: The structure is only drawn on the chart after price aggressively breaks out of the engulfing range, accompanied by a Fair Value Gap (FVG).
   
3. Historical Anchoring: Once confirmed, the block is plotted back to its origin, highlighting the exact zone where the market imbalance was created.
   

Key Features

• Break-away Filter: Eliminates low-probability signals by ensuring price has left the "zone of indecision."
  
• Dynamic Structure Plotting: Automatically draws the supply/demand blocks that acted as the catalyst for the breakout.
  
• Smart FVG Integration: Detects and highlights the gaps created during the breakout, providing additional confluence for entry.
  
• EBS Break-away Confirmed: Triggered the moment a new structure is validated by a decisive price breakout. This alert signals that a new supply or demand zone has been established.
  
• EBS Structure Tested (Mitigation): Triggered when price returns to touch a previously confirmed EBS block. This "Mitigation" often presents the highest risk-to-reward entry opportunity as it tests the origin of the breakout.
  

Trading Strategy

• The Breakout (Aggressive): Enter as soon as the EBS block and FVG appear, following the momentum.
  
• The Retest (Conservative): Wait for price to return and "mitigate" the EBS block. This retest of a confirmed breakout structure is a classic institutional entry pattern.