Order Flow and Market Structure
Understanding order flow reveals what smart money is doing.
Market Structure Basics
Trending Structure
- Higher highs, higher lows (uptrend)
- Lower highs, lower lows (downtrend)
- Break of structure signals change
Range Structure
- Price oscillating between levels
- Look for breakout or reversal
Break of Structure (BOS)
- When price breaks previous swing point
- Signals potential trend change
- Key entry signal for many traders
Change of Character (CHOCH)
- First sign of potential reversal
- Break against the current trend
- Often occurs at key levels
Order Blocks
What Are They?
- Areas where institutions placed large orders
- Often act as support/resistance
- Price tends to return to these zones
Identifying Order Blocks
- Look for strong moves away from consolidation
- The consolidation before the move is the OB
- Higher probability at key levels
Liquidity Concepts
Liquidity Pools
- Stops clustered at obvious levels
- Smart money targets these
- Above highs, below lows
Stop Hunts
- Quick spikes to trigger stops
- Then price reverses
- Don't put stops at obvious levels
Practical Application
- Identify higher TF structure
- Mark key order blocks
- Note liquidity areas
- Wait for structure breaks
- Enter at order blocks with confirmation