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Chart Patterns

Order Block

The last opposing candle before a strong move: an area where institutional orders were placed.

What is an Order Block?

An order block is the last bearish (down) candle before a strong bullish move, or the last bullish (up) candle before a strong bearish move. It represents a zone where institutional traders placed large orders.

Types

  • Bullish order block: the last red candle before a strong rally. When price returns to this zone, it often bounces
  • Bearish order block: the last green candle before a strong selloff. Price returning here often gets rejected

How to trade order blocks

Wait for price to return to the order block zone, then look for confirmation (a rejection candle, volume spike, or lower-timeframe structure shift) before entering. Place your stop loss just beyond the order block.

Related Terms

Fair Value Gap (FVG)

A three-candle pattern where the wicks of candles 1 and 3 don't overlap, leaving an imbalance zone price often returns to fill.

Institutional Trader

A professional trader employed by a firm to trade large positions on behalf of clients or the firm itself.

Liquidity Sweep

When price briefly breaks above a high or below a low to trigger stop losses before reversing sharply.

Supply and Demand Zones

Price areas where imbalances between buyers and sellers caused sharp moves: stronger than traditional support/resistance.