Definition Of Order Blocks: * An order block is a defined area where buyers or sellers of smart money entered market & moved price away from its price level to a new area of interest. Why Order Blocks: * The market is engineered by smart money by means of creating levels within the market place for them to use at a later date and time. How To Identify Order Blocks: * An order block can be identified by specific candlestick or bar that when viewed in institutional context, can highlight smart money buying and selling. Order Blocks: * Apart from commonly used supply and demand zones, order block are very specific levels that can be refined to lower time frame to exact price levels. Bullish Order Block: * A bullish order block is the last bearish candle prior to the move up. (see chart) Bearish Order Block: * A bearish order block is the last bullish candle prior to the move down. (see chart)
Trading With Order Blocks (TIPS): 1) Higher time frame market structure is in focus( I would use 1 hr or higher, attached chart is weekly order blocks). 2) Select an order block with largest body and shortest wicks. 3) When price is retesting an order block expect a price to bounce off at higher of bullish order block or lower of bearish order block, but middle of the order block is the last point of retracement when looking for entries, if price breaks the order block then find another order block. 4) Just like other natural support and resistance, before trading to the actual order block and reverse, most of the time price will fake the reversal then continue to an order block. 5) Stop loss is placed just above bearish order blocks and below bullish order blocks. 6) When major high/low is formed, look for fair value order block in middle of range to enter a trade, price should not retest highest/lowest order block. 7) Use other indicators like Fibonacci, moving averages, support and resistance, pivot points etc... to confirm your trading decision. 8) Always look left on charts to see if current price range is hitting or inside of a previous order block (these levels are important).
How to go into depth of orderblock and market structure, any books to read?
Anbat
⋅
@pav_technicals, youtube ICT and google- he has been doing forex breakdown and inventing a lot of concepts that are valid today. You will learn a lot from his free videos. gl
myk1o
⋅
Your bullish order block makes sense to me, candle body (open) to bottom wick.
But I can't follow the bearish order block. It looks like you used the candle body before the last bullish candle to the high wick. Shouldn't it have used that bullish candle to the right just before the red down candle? Seems like that would also go along with tip #2 if you used that next candle (2) Select an order block with largest body and shortest wicks.)
Anbat
⋅
@myk1o, I mostly use last blue candle and 1st red candle on bearish blocks, on 1hr, 4hr and daily. Visa versa for bullish trades, so my bearish one might be off one candle (bottom) high should have been only to 1.77000.
kalpavata
⋅
bro, which TF would you recommend for me to identify the order blocks? H1 or H4 ?
Anbat
⋅
@kalpavata, 1 hour or higher is best, less noise. gl.
nooby_trader
⋅
does break of structure required to define an order block?
@kalpavata, yes, 1hr, 4hr, daily & even weekly work.. then if you scalp and/or day trade or swing trade.. can go to lower time frames for candlestick set ups going away from these order blocks. Wish you the best.