Order Blocks

What is an Order Block?

An Order Block is the last bullish or bearish candle before a major displacement or structural break in the market. It represents an area where institutional participants executed large buy or sell orders to initiate a directional move. These zones reveal where liquidity was consumed to fuel a trend, making them critical for identifying potential reaction points in future price action.

Once structure breaks and price moves away, the Order Block remains a region of interest. When price revisits this zone, it often reacts due to residual institutional orders or rebalancing activity. This makes Order Blocks excellent reference points for entry or exit decisions, especially when combined with other forms of confirmation such as FVG alignment or liquidity sweeps.

Order Blocks are classified as Bullish OBs (before upward displacement) and Bearish OBs (before downward displacement). The most powerful setups occur when an OB aligns with a strong BMS, confirming a shift in order flow. When price returns to an OB and shows rejection or displacement, it indicates active institutional defense of that zone.

From a technical standpoint, Order Blocks represent the foundation of Smart Money structure. They reflect the core concept that institutions move the market through engineered liquidity collection and distribution phases. Understanding where these zones form allows traders to anticipate both continuation and reversal setups with precision, rather than reacting to random price movement.

How to Configure Order Block Indicator?

Show Labels - Toggle to show/hide labels.

Order Block Type - Choose between Wick or Body to define how the Order Block zone is calculated.

• Wick - Order Block extends from the candle's high to low.
• Body - Order Block extends only from open to close (candle body only). This is a more conservative approach with tighter zones.

Mitigation Type - Choose how strictly the indicator confirms that a block has been mitigated (filled).

• Close Inside - Block is mitigated when candle closes inside the block.
• Wick Inside - Block is mitigated when the wick (high/low) touches inside the block.
• Close > 50% - Block is mitigated when the candle closes past the mid-point (50%) of the block.
• Wick > 50% - Block is mitigated when the wick (high/low) crosses the mid-point (50%) of the block.
• Close Outside -Block is mitigated only when the close happens fully outside the opposite side of the block.
• Wick Outside - Block is mitigated only when the wick crosses (high/low) outside the opposite side of the block.

Colors - Set of colors for the three block states

• Bullish Order Block - Applied to bullish blocks that are active.
• Bearish Order Block - Applied to bearish blocks that are active.
• Mitigated Order Block - Applied to blocks that have been filled.

Max Order Block - Controls how many blocks are to be displayed on screen.

Distance from LTP - Sets how far the Order Block Boxes extend into the future from the current bar.