@Order Block
What is an Order Block?
An Order Block is a key concept in Supply and Demand trading and Smart Money Concepts (SMC). It represents a price zone where institutional traders (banks, large funds) placed significant buy or sell orders before a major price movement.
How It Works:
1. Formation:
· Before a big price move, institutions accumulate positions in a specific zone.
· This creates a congestion area on the chart (usually a rectangle or box shape).
· Once orders are filled, price moves away rapidly.
2. Types:
· Bullish Order Block: A consolidation zone before a strong up move. Acts as support.
· Bearish Order Block: A consolidation zone before a strong down move. Acts as resistance.
3. How to Identify:
· Look for a strong impulsive candle (breaking structure).
· Find the consolidation block right BEFORE that impulsive move.
· The block typically has multiple candles with small wicks.
4. Trading with Order Blocks:
· Entry: Wait for price to return to the order block zone.
· Confirmation: Look for reversal candlestick patterns (Pin Bar, Engulfing) at the block.
· Stop Loss: Place below (for bullish) or above (for bearish) the block.
· Target: Previous swing high/low or using risk-reward ratios (1:2 or 1:3).
5. In Crypto Markets:
· Works on all timeframes but most reliable on 1H, 4H, Daily.
· Crypto's high volatility can cause false breaks – always wait for confirmation.
· More effective in high liquidity pairs (BTC/USDT, ETH/USDT).
Key Rules:
· Order Blocks work best in trending markets.
· Always combine with market structure analysis.
· Use with other confluences: Fibonacci, volume, support/resistance.
