Smart Money Concepts
Order Block (OB): the last opposite candle before a strong move
An Order Block, or OB, is the last candle in the opposite direction before a strong move that breaks structure. SMC traders mark it as a zone where larger orders may have been placed, and watch how price reacts when it returns.
What it is
A bullish order block is the last down candle before an impulsive rally that breaks a swing high. A bearish order block is the last up candle before an impulsive drop that breaks a swing low.
Traders differ on the exact zone: the full candle range (wick to wick) or only the body. Pick one and apply it consistently. The idea that big players left orders there is a hypothesis, not a proven fact.
How to spot it
- Find a strong impulsive move that also breaks structure (a BOS or CHoCH).
- Walk back to the move's origin and find the last candle of the opposite colour.
- Draw a box over that candle (full range or body, per your rule) and extend it to the right.
- Watch how price behaves if and when it returns. Many order blocks are simply ignored.
Worked example (illustrative)
Illustrative example: after small down candles, a large green candle breaks above the prior swing high of 107. The last down candle before it spans 100 to 104, so that is the bullish OB. Price later pulls back into 100 to 104 and closes higher. On another day the same pattern could slice straight through the box.
Common mistakes
- Marking an OB on every candle. It should come with a strong move that breaks structure, not just any reversal.
- Entering without a plan for where you are wrong. A zone gives a reference, not protection.
- Forgetting that zones get used up. A zone that has already been tested several times is often treated as weaker.
Educational content only, using made-up prices. It is not investment advice and not a recommendation to buy, sell or hold anything. Trading carries risk of loss.
Frequently asked questions
What is an order block in trading?
In SMC, the last opposite-colour candle before a strong move that breaks structure, marked as a zone to watch on a revisit.
Do order blocks really show institutional orders?
That is the SMC claim, but candle charts cannot show actual orders. Treat it as a way of structuring your chart reading and test it yourself.
Which candle part is the zone: body or wick?
Both are used. Decide on one rule, write it down, and apply it the same way when you review trades.
Related concepts
Practise this on a live chart
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