Order Block
A price zone where institutional participants accumulated or distributed positions, often forming near swing highs and lows before significant moves.
An order block is a concept from the ICT trading methodology that identifies price zones where large institutional participants are believed to have accumulated or distributed positions. These zones often form near swing highs and lows and can precede significant price reversals.
How to identify an order block:
A bullish order block is typically the last bearish candle before a strong upward move. A bearish order block is the last bullish candle before a strong downward move. The idea is that this candle represents the final accumulation or distribution before the big move.
Why order blocks matter:
The theory is that institutional traders need to fill large orders without moving the market against themselves. They accumulate positions gradually in a range, leaving behind a "footprint" — the order block. When price returns to this zone, remaining unfilled orders may provide support or resistance.
Trading with order blocks:
- Identify a significant swing high or low.
- Mark the last opposing candle before the move as the order block zone.
- Wait for price to return to this zone for a potential entry in the direction of the original move.
- Combine with fair value gaps and kill zones for confirmation.
Key considerations:
Order blocks require practice to identify consistently. Not every order block will hold, and the concept is inherently discretionary. The most reliable order blocks tend to form at key structural levels with strong displacement away from the zone.