In smart-money-concept trading, the last opposing candle before a strong move, treated as a zone where institutions may have resting orders.
A bullish order block is the last down candle before a sharp rally; a bearish one is the last up candle before a sharp drop. The theory is that large players left unfilled orders there and will defend the zone on a retest.
Strip away the vocabulary and an order block is a support or resistance zone identified by the candle that preceded an impulsive move. Whether the institutional story is true is unprovable; the levels are still zones that many traders watch.
Example: after ranging around $50, a stock prints one red 15-minute candle from $50.20 to $49.90, then rallies to $53. The $49.90 to $50.20 zone is the bullish order block for a later pullback.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The parts of a candlestick. One candle sums up a slice of time: the thick real body runs from the opening price to the closing price, and the thin wicks reach out to the highest and lowest prices traded. Colour tells you which way the body ran.Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.
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