Structure

Order Block (OB)

A price zone where institutions placed aggressive orders before an impulsive move. It is the last opposing candle before a strong displacement.

Diagram: Order Block (OB)

Related indicator: Elite Order Blocks V4 View indicators

What Is an Order Block

An Order Block (OB) is the last bearish candle before a bullish impulsive move, or the last bullish candle before a bearish impulsive move. It represents the zone where institutional money (banks, hedge funds) accumulated positions before aggressively moving price.

How to Identify It

  1. Locate a strong impulsive move (displacement) that breaks structure.
  2. Look back to the last candle that moved against the impulse. That candle is the Order Block.
  3. Mark the zone from the open to the low (bullish OB) or from the open to the high (bearish OB).
  4. A valid OB must have a Fair Value Gap or displacement candle immediately after it.

How to Use It in Trading

  • Wait for price to return to the OB zone after the impulsive move.
  • Look for confirmation on lower timeframes (rejection candle, CHoCH on a smaller timeframe).
  • Place your stop loss below/above the OB, and your take profit at the last high/low or at an opposing liquidity level.
  • OBs in Discount zones (below the 50% level of the range) have a higher probability of reaction.

Key Considerations

  • Not all OBs are equal: those that form after a liquidity sweep are stronger.
  • An OB that has already been tapped once (mitigated) loses strength. Fresh (untouched) OBs are preferable.
  • On higher timeframes (4H, Daily, Weekly), OBs carry greater significance and durability.