Order Block (OB)
The last opposite-direction candle before an impulsive move, viewed as a zone where institutional orders may be concentrated.
An Order Block is the last opposite-direction candle (or small cluster of candles) before a strong impulsive move. SMC theory holds that this price range is where institutional orders were concentrated, so when price later retraces into that zone, there's a higher probability of a reaction.
A Bullish Order Block is marked on the last bearish candle before a strong rally; a Bearish Order Block on the last bullish candle before a strong decline. Some traders further distinguish between 'unmitigated' and 'validated' order blocks — the latter meaning price already showed a clear reaction on its first retest.
Order Blocks are often combined with FVGs and liquidity sweeps to form a 'confluence zone': when an Order Block overlaps with an FVG and sits near a recently swept liquidity level, this multi-factor confluence is typically viewed as a higher-quality area of interest.
Order Blocks aren't permanently valid — once price closes decisively (not just wicks) through the zone on strong volume, the block is typically considered invalidated or converted into an opposite-role structure (a Breaker Block). Traders need to update their markups dynamically rather than trading against a stale zone.
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