Order Block
Category
Fortgeschrittene Marktstruktur
Sub-category
ICT-Konzepte
Curated by
Last reviewed
In market-structure analysis, an order block is the last opposing candle (or candle group) before an impulsive move – for instance the last bearish candle before a strong rally. The zone is interpreted as an area where large market participants built positions and serves as an observed reaction zone on later pullbacks. The concept is a heuristic, not a confirmed causality.
Context & Mechanics
Definition
The order block comes from smart-money or ICT-oriented market-structure analysis. The idea: before large players trigger an impulsive move, they build positions – visible as the last opposing candlestick before the impulse. A bullish order block is the last bearish candle before a strong rally; a bearish one the last bullish candle before a sell-off. The zone between that candle's high and low (often reduced to the candle body) is marked and watched as a potential reaction zone on later pullbacks – similar to a refined support or resistance zone.
Quality criteria
In practice order blocks are filtered: the following impulse should break market structure (break of structure) rather than just be noise; the zone should be “fresh”, i.e. not yet tested several times; elevated volume in the impulse supports the interpretation; and higher timeframes deliver more robust zones than the minute chart. Order blocks are frequently combined with fair value gaps and liquidity levels above obvious highs/lows.
Critical assessment
The narrative “institutional orders still rest there” is not verifiable – order books do not permanently display resting orders, and public evidence for the causality is lacking. Soberly viewed, order blocks mark zones where a strong imbalance previously began – that prices react more often at such zones overlaps heavily with classic support/resistance logic. The concept only becomes tradable with defined rules (entry, stop behind the zone, target) and one's own journal statistics – historical hit rates replace belief in the narrative.
Why it matters for traders
Order blocks structure pullback entries in trending moves and provide logical stop placements (behind the zone). In the GlanWick chart, zones can be marked and their historical reaction rate checked by way of example – GlanWick is a training and simulation tool and not a prop firm itself.
Execution Example
A stock consolidates around $50. A final bearish candle falls from $50.20 to $49.80 – immediately afterwards price rises impulsively on high volume to $53, breaking the last swing high. A trader ($100,000 account, $1,000 risk) marks the candle zone $49.80–$50.20 as a bullish order block.
- Identification: last bearish candle ($49.80–$50.20) before an impulse with a structure break – the zone is fresh and supported by volume.
- Setup: buy limit at the upper zone edge $50.20, stop below the zone at $49.70 ($0.50 distance) → 2,000 shares for $1,000 risk (1R).
- Sequence: the pullback reaches $50.10, the zone holds, price turns – the target at the last high of $53 would be +5.6R; conservatively half is realised at +2R ($51.20).
- Statistics instead of belief: only journal evaluation across many such zones shows whether the reaction rate carries the ruleset – a single hit proves nothing.
Execution Risk & Errors
Marking every opposing candle as an order block without checking structure break and impulse quality
Treating repeatedly tested (spent) zones like fresh ones
Understanding the smart-money narrative as proven causality instead of a heuristic
Trading without a defined stop behind the zone
Never evaluating the reaction rate of one's zones in the journal
Frequently Asked
What distinguishes an order block from classic support/resistance?
The construction: order blocks are derived from the last opposing candle before an impulse, classic zones from repeatedly tested highs and lows. In practice both frequently overlap.
Is the order-block theory proven?
The narrative of resting institutional orders is not verifiable. Only one's own statistics are reliable: defined rules, many observations, journal evaluation of the reaction rate.
On which timeframe do order blocks work best?
Higher timeframes (H1 upwards) historically deliver more robust zones than minute charts because they contain less noise. Many traders identify the zone on the higher and time the entry on the lower timeframe.
What makes an order block “fresh”?
The zone has not been tested since it formed. With every test it is considered more spent, because the presumed residual liquidity decreases.