Glossary
What Is an Order Block in Trading and How to Find It
The last opposite-colour candle before an impulse. A zone for the stop and the entry: price moving beyond it cancels the impulse idea.
How it works
An order block (OB) is the last candle in the opposite direction right before a strong impulsive price move. For example, if the last candle before a sharp rally was bearish, that candle is marked as the bullish order block: the zone is presumed to hold unfilled large orders that may have fueled the move that followed.
You find an OB on a chart by locating where a strong impulse starts and marking the last candle against that impulse's direction right before it begins. The range of that candle — from body to body, or wick to wick, depending on the approach — is treated as the order block zone.
The logic behind using OBs is similar to FVGs: price may return to that zone before continuing, and traders treat such a return as a potential entry in the direction of the original impulse, not as a standalone reason to trade against the trend.
Example
Price drops from 105 to 98 on a bearish candle, and the last bullish candle before it had a body from 104 to 106. The 104–106 zone is marked as a bearish order block — if price returns into that range, a trader may look for an entry continuing the drop.
Common mistake
A common mistake is marking an order block on every small candle without checking the strength of the move that follows. A weak move afterward doesn't create a zone significant enough to base an entry on.
Read next
Related terms
Frequently asked questions
- Is an order block the same as a support/resistance zone?
- No, an order block is defined relative to a specific candle before an impulse, not an arbitrary horizontal line drawn through price touches.
- Does an OB work without a return of price to it?
- An OB by itself is just a zone of interest; if price never returns to it, no entry signal forms in the first place.
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