Trading book Order Block

Order blocks are essential structures in trading that indicate areas where large institutional traders, like banks and hedge funds, have placed their orders. These blocks represent significant price levels where substantial buying or selling activity has occurred, providing clues about potential market movements

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🧱 What is an order block? An order block (OB) is the last bullish or bearish candle before a strong countertrend movement. This is the place where institutions or banks entered in large quantities and triggered the price. Types of order blocks: 1. Bullish Order Block (OB): This is the last bearish candle before the price surges sharply upward. We expect support and a retest for a buy entry. 2. Bearish Order Block (OB): This is the last bullish candle before a strong decline. We expect resistance and a sell entry opportunity. ✅ Conditions for a Correct Order Block: It occurs before a strong movement (Break of Structure - BOS or Change of Character - ChoCh) After which the market structure is broken (Structure Break = confirmation of institutional entry) It often includes: FVG (Price Gap) Strong Volume Liquidity taken before the breakout ❌ Weak Order Blocks: They occur without a breakout of the structure. They do not contain high or negative volume. There is no price reaction on the retest. They do not fall within the Golden Fibonacci areas (0.618 - 0.705). 🧠 How to Use OB in a Strategy? Example: Combining with ICT: Identify a Liquidity Sweep (e.g., a clear Low or High). Then, observe the next OB and the market's breakout from it. Wait for the price to return to the OB (a retest). Confirmation with: Price Action Candle Positive Delta in Order Flow Supporting Fibonacci Level 🔍 Tools to Help You: The best timeframe for observing the OB is 15m to 4h for analysis, and 1m to 5m for entry. Use a Volume Profile or Footprint Chart to measure flow volume. Ensure there is an FVG, Breaker, or Mitigation Block near the OB.