Order Block

Also: OB · Bullish Order Block · Bearish Order Block

Definition

An order block is the last opposing candle before a displacement move that takes out a swing point and shifts price in the other direction. A bullish order block is the last down-close candle before an impulsive move higher; a bearish order block is the last up-close candle before an impulsive move lower. It represents the price range where the algorithm accumulated or distributed before delivery.

Key characteristics

• Last down-close candle (bullish OB) or last up-close candle (bearish OB) before displacement
• Must be followed by a move that displaces and breaks structure
• Entire candle body (open-to-close) is the OB zone; wicks often extend the zone
• [[Mean Threshold]] (midpoint) is the primary entry reference
• Lower timeframe OBs embed inside higher timeframe OBs
• Best OBs sit inside a clear premium (for bearish) or discount (for bullish)

How it forms

Before a significant directional move, the algorithm books orders against the coming direction — one last pullback that traps retail traders on the wrong side. That final opposing candle is where institutional positioning occurred. When price returns to that zone, the algorithm defends it and delivers price back in the direction of the original displacement.

How to use

Enter on touch of the OB high (bearish) or OB low (bullish), or wait for price to trade to the [[Mean Threshold]]. Stop beyond the opposite extreme of the OB plus a small buffer. Target the next opposing PD array or liquidity pool. Pair with kill-zone timing for precision.

Common mistakes

• Calling any down-close candle in an uptrend an "order block" without confirmed displacement
• Ignoring premium/discount — buying a bullish OB that sits in premium of the dealing range
• Entering without HTF bias alignment, turning the OB into a coin flip

Source quotes