Order Blocks Explained

Order blocks are areas where institutions placed large orders, and price often returns to these zones.

What is an Order Block?



Definition

• The last candle before a strong move
• Represents institutional order placement
• Acts as supply/demand zone

Why They Work

• Institutions leave unfilled orders
• Price returns to fill remaining orders
• Creates high-probability zones

Bullish Order Block

Identification

• Last bearish candle before bullish impulse
• Strong move up follows
• Creates Break of Structure

Characteristics

• Usually a red/bearish candle
• Located at swing lows
• Followed by displacement

Trading It

• Wait for price to return
• Enter on touch of OB
• Stop below the OB
• Target next liquidity

Bearish Order Block

Identification

• Last bullish candle before bearish impulse
• Strong move down follows
• Creates Break of Structure

Characteristics

• Usually a green/bullish candle
• Located at swing highs
• Followed by displacement

Trading It

• Wait for price to return
• Enter on touch of OB
• Stop above the OB
• Target next liquidity

Order Block Refinement

Basic OB

• Entire candle body
• Wider zone
• More conservative

Refined OB

• 50% of the candle
• Tighter entry
• Better risk-reward

Extreme OB

• Just the wick
• Most aggressive
• Highest reward potential

Valid vs Invalid Order Blocks

Valid OB Criteria

1. Creates Break of Structure
2. Has displacement (strong move)
3. Leaves imbalance/FVG
4. Unmitigated (not tested yet)

Invalid OB Signs

• No structure break
• Weak move after
• Already mitigated
• Inside ranging market

Mitigation

What is Mitigation?

• When price returns to an OB
• Fills remaining orders
• OB becomes invalid after

One-Touch Rule

• Most OBs only work once
• After mitigation, find new OB
• Exception: extreme OB wicks

Timeframe Considerations

HTF Order Blocks

• Daily/Weekly
• Major zones
• Stronger reactions

LTF Order Blocks

• H1/M15
• Entry refinement
• Within HTF zones

Practical Tips

1. Only trade OBs with structure break
2. Look for confluence with liquidity
3. Higher timeframe OBs are stronger
4. Don't chase - wait for price to come to you
5. Always have a clear invalidation point