Order blocks are found all over a price chart on all timeframes. An orderblock simply indicates a large grouping of orders placed at a specific price level. The sheer size of these orders cause price to impulsively move away due to large volume being traded. A key thing to note about order blocks is that the impulsive move should break structure to be considered valid and high probability.

Institutions that place large orders often are not able to facilitate their full positions at one time before price rapidly moves away. Because of this, price gravitates back to these order blocks to facilitate the remaining orders only once the supply/demand is rebalanced from the initial order.

Because price rapidly moves away from that area it forms an imbalance in price as it needs to seek liquidity. Price will eventually gravitate back to that orderblock to collect the final liquidity resting at that area before continuing in the direction of the impulse that created the order block.

Orderblocks have various names associated with them but at the end of the day they are all the same concepts - large orders being placed in the markets. They can also be referred to as Sponsored Candles (SC), Institutionally Funded Candles (IFC), Punch Candles, Supply & Demand zones, etc.

We use orderblocks as a framework to enter trades either long or short depending if it is a bullish or bearish orderblock. We are able to base an entry at either the distal or equilibrium point on the orderblock - this ultimately comes down to personal preference and is based on your own testing. The stop loss of the trade should be placed at the distal point of the orderblock with a potential buffer in pips (spread).

We are looking to execute buy entries when price retests the bullish orderblock. We can either set a buy limit order at the proximal line or at the equilibrium point (50%) of the orderblock. The stop loss for the trade will be placed below the distal line of the bullish orderblock.

We are looking to execute sell entries when price retests the bearish orderblock. We can either set a sell limit order at the proximal line or at the equilibrium point (50%) of the orderblock. The stop loss for the trade will be placed above the distal line of the bearish orderblock

Q: How long is an OB valid for? A: An OB can be valid for a very long time unless it's already been mitigated/depleted. Remember- an OB is created because there wasn't enough liquidity to fill all the orders before a break of structure. Price will want to come back to pick those leftover orders and continue the movement.

You can watch PA through orderblocks. As you can see, not every order block is valid.

But if you add on your oderblock big impulsive imbalances, it will increase the success of order blocks.