OB: Order Block
Also known as: OB, order blocks, origin candle, institutional candle
What is it?
An order block is the last opposing candle before a strong directional move - the down candle that precedes a rally, or the up candle that precedes a sell-off - marked as the area the move originated from. On GBP/USD hourly, the last down candle before a rally has a body running from 1.2712 down to 1.2698. Price then displaces higher to 1.2790, breaking structure on the way.
The 1.2698-1.2712 body of the last down candle before the rally became the zone price returned to, turning higher from 1.2704.
Two sessions later it pulls back into that 1.2698-1.2712 band, trades down to 1.2704, and turns higher again. The block gave you both halves of a trade plan before price ever returned: an entry zone at 1.2698-1.2712 and an invalidation just below 1.2698. What separates a block worth watching from an arbitrary candle is what happened next.
The move away from it should have been decisive enough to break structure, and the block should still be unmitigated, meaning price has not already returned and reacted there. Blocks that led nowhere are just candles. Even a well-formed one fails regularly - it defines a zone and a risk level, not an outcome, and your capital is at risk on every trade taken from one.
Why it matters: An order block gives you a defined zone to wait for instead of chasing a move, and a natural invalidation level just beyond it to place your stop.
The block's edges define both the entry zone and the invalidation level, so mislabelling one puts your stop on the wrong side of the trade.
Real-world example
GBP/USD's last down candle before a rally had a body from 1.2712 to 1.2698; price ran to 1.2790, returned into that band and turned higher from 1.2704.
How SignalBots handles it
SignalBots signals name an entry level and an invalidation level together, so a zone-based setup keeps the same defined-risk framing across the connector and Telegram surfaces. See /risk-warning.
Pro tip
Only give weight to an order block that produced a break of structure - a candle that led nowhere is just a candle, not a zone worth risking money on.
Common pitfalls
Drawing a block on every opposing candle, which fills the chart with zones and makes any later move look like it respected one.
Frequently asked questions
How do I find an order block?
Find a strong directional move that broke structure, then look at the last candle that closed against that direction immediately before it. The body of that candle, and sometimes its full range, is the block.
Body only, or the whole candle range?
Both definitions are used. The body is tighter and gives a smaller stop; including the wick gives a wider zone that price is more likely to reach, but a worse reward-to-risk when it does. Pick one and stay consistent.
What is a mitigated order block?
One that price has already returned to and reacted from. Many traders only take unmitigated blocks, on the view that the orders which made the zone significant have already been filled the first time round.
Are order blocks reliable?
They are a framework for defining a zone and an invalidation level, not a predictor. Plenty fail outright, and results depend on the wider trend and your risk management. Your capital is at risk on every trade.
How is this different from support and resistance?
Support and resistance are levels price has repeatedly reacted to in the past. An order block is defined by a single candle at the origin of a move, so it can be marked before price has ever returned there.
Trading involves substantial risk of loss. Historical and backtested results do not guarantee future performance. Read the full risk warning.
