Everything You Need To Know About OrderBlocks
In this post, I take you through everything you need to know about orderblocks (OBs).
First of all, before we begin with the different types of orderblocks, we have to go through what is an orderblock (OB).
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What Is An OrderBlock
Banks and large institutions open trades with millions and millions of dollars. Many times it is impossible for their orders to be filled all at once. Actually this is most of the times. Hence, they need to break one large order into blocks of orders. And this is an orderblock.
Pay close attention in order to know everything about OrderBlocks. On the image above, we see an 1D orderblock being respected after a break of structure (BOS) towards the upside. Hence, the term OB, from now on and during this whole post will refer to the lowest candlestick (bullish OB) before an upmove, or to the highest candlestick before a down move (bearish OB).
The gray highlighted area, is the Daily OrderBlock. Nonetheless, now we are taking a look at it on the 15min time frame.
You can clearly identify inducement taking place. Furthermore, we can see that there was grab of liquidity. These are things that you can only identify on a lower time frame. If we would identify our OB on the 15min timeframe, then you would probably be able to see a whole lot of price action on the 1min time frame.
Everything You Need To Know About Bullish Orderblocks And How To Identify Them
Bullish Orderblock As A Bearish Candlestick
In the gray highlighted area, you can see that I have highlighted this last bearish candlestick. This is what most people think about when they think about orderblocks. That it should be a bearish candlestick before an upwards movement or a bullish candlestick before a down movement.
As you will keep reading this post, you will learn that this is not the case. But no worries, I will teach you everything you need to know about orderblocks in a simplified manner. Trading should be simplified and not overcomplicated.
The one above, is indeed a valid orderblock. It is called a bullish orderblock even though it is a bearish candlestick. It is called bullish because it is the lowest candlestick before the break of structure towards the upside.
Bullish Orderblock As A Bullish Candlestick
On the image above, you can see a bullish orderblock. In this occasion, it also happens to be a bullish candlestick. Notice that it is the lowest candlestick after the initiation of the movement that broke structure towards the upside.
Everything You Need To Know About Bearish OrderBlocks
Everything You Need To Know About Bearish OrderBlock As A Bullish Candlestick
On the above image, we can see a bullish candlestick serving as a bearish Orderblock. Just notice how this was the last up candlestick before the impulsive move that broke structure towards the downside.
Everything You Need To Know About Bearish Orderblock As A Bearish Candlestick
In this occasion, you see a bearish candlestick serving as a bearish OB. Look at how it got retested perfectly before price moved towards the downside. And remember, it is absolutely up to you where you place your trade, either at the beginning, 50% level etc.
If you want a video format about everything regarding Orderblocks, then check out this video:
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