Order Blocks
Overview
An order block is the last opposing candle before a strong institutional move — the final bearish candle before a bullish impulse (bullish OB) or the final bullish candle before a bearish impulse (bearish OB). Order blocks represent zones where institutions placed large orders, and price tends to return to these zones for continuation.
Key Concepts
Bullish OB: last bearish candle before a strong up-move. Bearish OB: last bullish candle before a strong down-move. The candle's body (not wicks) defines the zone. Must cause a displacement (strong, fast move away). Breaker blocks form when OBs are violated.
Entry Signals
Price retracing into a bullish OB at support, Price retracing into a bearish OB at resistance, OB in confluence with FVG or liquidity sweep, OB on a higher timeframe with lower-timeframe entry
Exit Signals
Stop below the OB low (bullish) or above OB high (bearish), Target the previous liquidity pool or opposing OB, Invalidation: if price closes through the OB body
Best Timeframes
15M for entries, 1H/4H for OB identification, Daily/Weekly for HTF bias
Pro Tips
Not every candle before a move is a valid OB. True OBs must cause displacement — a strong, impulsive move with large-bodied candles away from the zone.
More Topics in This Category
Institutional Candles
Institutional candles (also called displacement candles or impulse candles) are large-bodied candles with little to no wicks that represent strong institutional activity. They break through structure and create FVGs. The characteristics of these candles — body size, wick ratio, volume — reveal where institutions are committing capital.
Change of Character (ChoCH)
A Change of Character is the first break of structure AGAINST the prevailing trend. In an uptrend, ChoCH is the first lower low. In a downtrend, ChoCH is the first higher high. ChoCH signals a potential trend reversal and is one of the most important SMC concepts for identifying turning points.
Optimal Trade Entry (OTE)
The Optimal Trade Entry is an ICT concept that identifies the highest-probability retracement zone for entering trades in the direction of the prevailing trend or order flow. The OTE zone sits between the sixty-two and seventy-nine percent Fibonacci retracement of the most recent impulsive leg, which aligns with institutional re-entry pricing. Entries at the OTE provide favourable risk-to-reward ratios because the stop is placed just beyond the swing point.
Break of Structure (BOS)
A Break of Structure occurs when price breaks a previous swing high (in an uptrend, confirming continuation) or swing low (in a downtrend, confirming continuation). BOS confirms the prevailing trend and is used to trail bias. Internal BOS occurs within a trend leg; external or structural BOS breaks the last significant swing.