REFINED ORDER BLOCK STRANGULATON STRATEGY BY DrKray
Recently price action has taught me not to get too confident and cocky when dealing with it. Picture this: you have your trade set up as accurately and well thought out as it could possibly be. Unfortunately, your stop gets hit. You encourage yourself that a SL getting hit is necessary and not a thing to be depressed over. You remind yourself how SL is part of the strategy to begin with. It is part of being a good trader, you tell yourself. Acknowledging the need for all the above, it does not necessarily have to be accepted. What if I tell you your stop being hit, most times, stems from poor analysis? Well then, let’s get into it.
Order block, simply put, means the area of interest with notably large buy or sell entries on an assets price action. These areas are where you will find institutional money (smart money) at different intervals. Finding SM is difficult but with persistence they are really easy to spot. They spill clues all over the chart that only due diligence can help you hunt. As a day trader, I get my large timeframe OB (Daily) which corresponds to the candlestick with the extreme high or low before the impulsive move in the opposite direction.
Refining your OB means charting the most active/responsive area of interest by SM. This can only be achieved on lower timeframes, enabling you flow with market structure.
Refined Order block strangulation simply means an intense price volatility from a squeezed demand and supply zone. The use of trend lines here is very important.
Other important tools and indicators required include relative strength index, stochastic relative strength index, Hull suite by Insilico and volume. I also use MACD but for simplicity I won’t add it.
Steps
1. Find your order block on the daily timeframe. This would be the last candlestick before the expansion phase of price action.
2. Look for a break of market structure. This will be price action breaking the extreme high or low after crossing the hull suite by Insilico.
3. Patiently wait for a retest of the OB as you observe market behavior on different timeframes.
4. Confirm successful retest and change of trend by the hull suite changing color with SHULL above MHULL for downtrend; MHULL above SHULL for uptrend. This will be followed by the commencement of a new expansion phase from lower timeframe through your entry timeframe (1H-4H for entry and 1-5 minute timeframes for SL). Make sure to enter only after change of color of Hull on 1 hour timeframe.
Upon alignment of the above mentioned, enter from the last price.
NB:
It can take price action as long as 2-3 days for a setup to be complete. Your entry must be after price breaks and closes above or below your OB and confirmed by color change of the hull suite. You can however be more aggressive by taking your entry inside the OB so long Hull suite is in harmony with the direction of trend. SL should be the low or high of the candlestick confirming change or continuation of trend. TP should be the low/high from prior swing high or low and is measured from the top to bottom of the channel of strangulation. An average of 3-6 hours is needed for price action to hit tp.
RSI: > 50 is bullish, < 50is bearish. >/= 80 is overbought, </=20 is oversold.
Stochastic RSI: > 50 is bullish momentum, < 50 is bearish momentum. >/= 90 is overbought, </=10 is oversold.
Hull Suite by Insilico: This indicator Hull is an extremely responsive and smooth moving average that informs on the leading trend. It can be searched for on trading view.
This strategy is a one-time use. Once the target is reached, don’t try a second attempt. On most occasions, it will not hold support or resistance till the point of break is reached a second time. Institutional money does not spend too much time being invested. It will look for the next point of interest, add liquidity to drive price towards the next obvious order block, lock in profits when targets are met, then get out of the market. Other price movements seen after this move are made by retail traders and cannot be fully trusted. Only place you find institutional money is point of interest that initiated the new burst move.
CONCLUSION
Use this diligently!
Order block, simply put, means the area of interest with notably large buy or sell entries on an assets price action. These areas are where you will find institutional money (smart money) at different intervals. Finding SM is difficult but with persistence they are really easy to spot. They spill clues all over the chart that only due diligence can help you hunt. As a day trader, I get my large timeframe OB (Daily) which corresponds to the candlestick with the extreme high or low before the impulsive move in the opposite direction.
Refining your OB means charting the most active/responsive area of interest by SM. This can only be achieved on lower timeframes, enabling you flow with market structure.
Refined Order block strangulation simply means an intense price volatility from a squeezed demand and supply zone. The use of trend lines here is very important.
Other important tools and indicators required include relative strength index, stochastic relative strength index, Hull suite by Insilico and volume. I also use MACD but for simplicity I won’t add it.
Steps
1. Find your order block on the daily timeframe. This would be the last candlestick before the expansion phase of price action.
2. Look for a break of market structure. This will be price action breaking the extreme high or low after crossing the hull suite by Insilico.
3. Patiently wait for a retest of the OB as you observe market behavior on different timeframes.
4. Confirm successful retest and change of trend by the hull suite changing color with SHULL above MHULL for downtrend; MHULL above SHULL for uptrend. This will be followed by the commencement of a new expansion phase from lower timeframe through your entry timeframe (1H-4H for entry and 1-5 minute timeframes for SL). Make sure to enter only after change of color of Hull on 1 hour timeframe.
Upon alignment of the above mentioned, enter from the last price.
NB:
It can take price action as long as 2-3 days for a setup to be complete. Your entry must be after price breaks and closes above or below your OB and confirmed by color change of the hull suite. You can however be more aggressive by taking your entry inside the OB so long Hull suite is in harmony with the direction of trend. SL should be the low or high of the candlestick confirming change or continuation of trend. TP should be the low/high from prior swing high or low and is measured from the top to bottom of the channel of strangulation. An average of 3-6 hours is needed for price action to hit tp.
RSI: > 50 is bullish, < 50is bearish. >/= 80 is overbought, </=20 is oversold.
Stochastic RSI: > 50 is bullish momentum, < 50 is bearish momentum. >/= 90 is overbought, </=10 is oversold.
Hull Suite by Insilico: This indicator Hull is an extremely responsive and smooth moving average that informs on the leading trend. It can be searched for on trading view.
This strategy is a one-time use. Once the target is reached, don’t try a second attempt. On most occasions, it will not hold support or resistance till the point of break is reached a second time. Institutional money does not spend too much time being invested. It will look for the next point of interest, add liquidity to drive price towards the next obvious order block, lock in profits when targets are met, then get out of the market. Other price movements seen after this move are made by retail traders and cannot be fully trusted. Only place you find institutional money is point of interest that initiated the new burst move.
CONCLUSION
Use this diligently!
Comment:
See how effective this strategy is? Price action seemed to have been in continuation mode and many retail traders would have bought this setup but our refined order block strangulation strategy painted a different picture. Sellers are the dominant party for now so we wait this out and not get caught up in this tug of war.
Comment:
Still range bound. Wont be placing an entry for a choppy price action. It can hurt seeing price go the direction you predicted but it hurts less when you consider how you dint gamble your money. Lets wait for a setup, patience is key when considering risk management.