Glossary
Order Block
The last opposing candle before a strong, displaced move — a zone where institutions absorbed flow.
Order Block, explained
An order block is the last opposing candle before price displaces strongly in the other direction: the last down candle before a rally, or the last up candle before a sell-off. The idea is that this candle marks where large orders absorbed the opposite side before powering the move.
The essential ingredient is displacement — a decisive, fast move away from the candle. Without that aggression you have an ordinary candle, not an order block. Many traders also require a preceding liquidity sweep and a following break of structure to validate it, so the block sits at the origin of a move that genuinely shifted structure.
Quality varies, and learning to grade order blocks is most of the skill. The strongest ones form right after a liquidity sweep, launch a move that breaks structure, and leave a fair value gap behind — three forms of confirmation stacked at one level. A candle that simply preceded a drift higher is not the same thing.
When price returns to a valid order block, it often reacts, which makes the block a logical entry zone with a structural stop just beyond its far edge. A fresh, unmitigated block is generally considered stronger than one price has already tapped, because the orders that give it its edge are still resting there.
On the desk, order blocks are a primary entry tool: we wait for a sweep, a shift in structure, and a return to the block rather than chasing the initial move. We keep a full walkthrough of trading them — see the dedicated guide for the step-by-step method. (Deep-dive: /learn/what-is-an-order-block)
Frequently asked questions
- What makes a valid order block?
- Displacement is essential — a strong, fast move away from the candle. The best blocks also follow a liquidity sweep, lead to a break of structure, and leave a fair value gap, so several signals confirm the same level.
- What is the difference between an order block and support/resistance?
- Support and resistance are simple horizontal lines; an order block is the specific origin candle of a displaced move, tied to a sweep and a structural break. SMC focuses on the order flow behind the level, not just the line.
- Why is a fresh order block stronger?
- An unmitigated (untested) order block still holds the resting orders that give it its edge. Each time price returns and reacts, some of those orders are consumed, so a previously tapped block tends to be weaker.
Related terms
Fair Value Gap (FVG)
A price imbalance left by a fast three-candle move that price often returns to fill.
ReadLiquidity Sweep
A sharp push past a high or low that triggers resting stops before price reverses — also called a stop hunt.
ReadBreak of Structure (BOS)
Price breaking a prior swing high or low in the direction of the trend, confirming it continues.
ReadDisplacement
A strong, decisive move that signals real intent — the engine behind order blocks and fair value gaps.
Read
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