Mastering Order Blocks — The Smart Money Edge 🧵 If you’ve heard traders say: “Price reversed exactly from there!” They’re talking about Order Blocks — the footprints of smart money. In this thread: ✅ What is an Order Block ✅ Types of OBs ✅ How to Identify ✅ Entry, SL,
1) What is an Order Block? An Order Block is the last bullish or bearish candle before a strong move (usually a breakout). 📌 It represents where institutions placed large orders before price exploded. ✅ These are zones of unfilled orders ✅ Price often revisits to fill them
2) Why Order Blocks Work? Institutions don’t enter positions in one shot. They accumulate over time → creating imbalances. Price returns to these zones to: ✅ Re-test supply/demand ✅ Trap retail traders ✅ Fill pending institutional orders 💡 They’re not just
3) Types of Order Blocks 1️⃣ Bullish Order Block → Last bearish candle before a strong upmove → Demand zone 2️⃣ Bearish Order Block → Last bullish candle before a strong downmove → Supply zone ✅ Strongest when followed by a Break of Structure (BOS)
4) How to Identify a Valid OB (Checklist ✅) 🔍 For a Bullish OB: ✅ Last bearish candle before strong rally ✅ Followed by BOS (new HH) ✅ Imbalance (price didn’t trade evenly both sides) ✅ Price returns with rejection wick or engulfing candle 🔍 For a Bearish OB: ✅ Last
5) Strategy A: OB + Break of Structure (Sniper Entry) 📌 Setup: Identify OB Wait for price to break structure (HH/LL) Price returns to OB 🎯 Entry: On rejection wick or engulfing near OB ❌ SL: Just above OB zone (for bearish) Below OB (for bullish) 🎯 Target: Recent
6) Strategy B: OB + Fair Value Gap (FVG) 📌 Setup: OB forms Strong move creates imbalance (FVG) Price returns to fill FVG + OB overlap 🎯 Entry: Inside FVG + OB overlap ❌ SL: Below OB 🎯 Target: High R:R (often 1:3 or better) ✅ Use Volume + Wick rejections to confirm
7) Strategy C: OB + Liquidity Grab (Stop Hunt) 📌 Setup: Price grabs liquidity above prior high Creates OB before reversal Returns to OB zone 🎯 Entry: Enter short on rejection from bearish OB ❌ SL: Just above wick (liquidity point) 🎯 Target: Opposite liquidity zone /
8) Real Example (BankNifty 5m) 1️⃣ Bearish OB @ 49,950 (last bullish candle) 2️⃣ Price breaks down → BOS 3️⃣ Comes back to OB 4️⃣ Rejection wick forms + volume drop 🎯 Entry: Buy 49,800PE @ ₹80 ❌ SL: ₹105 🎯 Target: ₹140 (hit in 20 mins) 💥 Classic OB + BOS setup
9) Timeframes for OB Trading 📍 Scalping: 1min + 5min combo 📍 Intraday: 5min OB + 15min BOS 📍 Swing: 1H OB + Daily BOS 📍 Positional: 4H + Weekly structure 💡 Always mark OB on HTF → trade entries on LTF
10) Indicators to Combine with OB ✅ Volume: → Spike confirms institutional activity ✅ FVG/Imbalance: → Confirms price moved too fast ✅ Market Structure (HH/LL): → Validates BOS ✅ RSI Divergence: → Helps catch reversal in OB zone ✅ VWAP: → Confirm if OB aligns with
11) SL, Target, Trailing ✅ SL: Below OB wick Use structure SL, not % ✅ Target: BOS target Next OB zone Fib 1.272, 1.618 extensions ✅ SL Trailing: Once 1:1 hit → move SL to cost Trail below EMA 9 or last candle low
12) Pro Tips for Order Block Trading ✅ Don’t trade OBs without BOS (fake zones) ✅ Watch for confluence: OB + FVG + BOS + Liquidity = 🔥 ✅ Always wait for confirmation candle inside OB ✅ HTF OBs are more powerful ✅ Backtest your OB marking — accuracy improves over time
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