An Order Block is the final candle before an impulsive move that leads to a break in market structure. This basically means the most recent higher high gets taken out. Or the most recent lower low gets taken out.
Order Blocks
Order Blocks & Mitigation
When we take a look at supply & demand, or bullish & bearish Order Blocks, the newer is usually the better. So what i mean by this is an un-tested supply or demand zone, or an untested order block is more likely to give us the expected reaction that we are looking for with price, as opposed to one that price has already come into before, to mitigate.
A quick rule of thumb: The 50% equilibrium point of a particular Order Block can act as a strong level where price likes to mitigate to, before continuing in that overall direction. What I have found to be true in my own testing is, if price comes up to fill 50% of the Order Block, then we can now classify that Order Block as mitigated, and completed, and for no reason to look at that area for future interest.
Which Time frame
The time frame your trading, and the market structure you are currently seeing is important, meaning: Are you seeing bullish market structure? If you are, then it would make more sense to be looking tor long trades at demand zones and bullish Order Blocks, rather than looking for supply zones and shorting bearish Order Blocks. Obviously the same concepts apply if you are seeing bearish market structure.
Usually speaking, the higher the timeframe, the more significance the zones, or Order Blocks will have. Meaning they can be more reliable Example: Taking a long from a 4 hour Order Block that led to a €5000+ move, could give more of a reaction from taking a long from a 15 minute Order Block that led to only a €500 move in price.
Bullish Order Blocks
A bullish Order Block is the last down candle before a bullish, impulsive move to the upside that breaks structure. We will see large momentum to the upside, which usually leaves behind some price imbalance.
Order Blocks are just a fancy word for supply and demand levels, where large institutions have placed big orders at these areas in the market. The theory, is that price will eventually gravitate back towards these Order Blocks, to re-balance price; fill any liquidity; and for more orders to be placed.
Once we get these Order Blocks form, they normally leaves behind imbalance. So price needs to return back and make price efficient before continuing up.
We can identify a clear entry, and stop-loss with Order Blocks. Entry at the top of the Order Block with a stop-loss at, or just below the Order Block.
Bearish Order Blocks
A bearish Order Block is the last up candle before a
bearish, impulsive move to the downside that breaks
structure. We will see large momentum to the downside,
which usually leaves behind some price imbalance.
Large institutions have placed big orders at these areas in
the market. The theory, is that price will eventually gravitate
back towards these Order Blocks, to re-balance price; fil
any liquidity; and for more orders to be placed.
Once we get these Order Blocks form, they normally leaves
behind imbalance. So price needs to return back and make
price efficient before continuing down.
We can identify a clear entry, and stop-loss with Order
Blocks. Entry at the top of the Order Block with a stop
loss at, or just below the Order Block.
Frequently asked questions
Got a question about how we’re organised, applying to work for us, or looking for financial or shareholder information? View more Q&A here
I'm having trouble accessing my account online. What should I do?
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
What is the address I mail my credit card payment to?
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
How do I dispute a charge on my account?
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
How do I contact the payment assistance team?
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
How do I activate a card?
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
