What is an order block?

The footprint of big money

Banks, funds and other large traders can't buy millions of shares in one click. If they did, they would push price against themselves. They split their orders up and fill them over a period of time, usually while price is moving against the direction they really want.

An order block is the price area where that heavy buying or selling seems to have happened, just before a strong move. On a chart it usually looks like the last opposite-coloured candle before an explosive move.

Two kinds

• Bullish order block: the last down (red) candle before a strong rally that breaks a recent swing high. Buyers were quietly absorbing sell orders there.
• Bearish order block: the last up (green) candle before a sharp drop that breaks a recent swing low. Sellers were distributing into buyers there.

Why traders care

Large players often leave orders unfilled. When price comes back to the zone later, those leftover orders can step in again, so the zone can act like a floor (bullish) or a ceiling (bearish). Traders call this return a mitigation or retest.

What an order block is not

An order block is not any random candle. Look for three things:

1. A clear opposite-coloured candle (or small cluster of candles).
2. A strong, fast move away from it. Big candles, little overlap.
3. That move breaks structure: it closes beyond a previous swing high (for bullish) or swing low (for bearish).

If there is no break of structure, the zone is much weaker. It might just be noise.

Key takeaway

Think of an order block as a possible area of interest, not a guarantee. It tells you where buying or selling pressure was strong in the past. What price does when it returns there is what you study next.