What Is Order Block in Forex?
An Order Block is a point of interest on a chart where institutional traders like banks have placed pending buy or sell orders.(better seen on 15 Minute to 1 Hour Time Frames).
Institutional traders always trade high volumes so anywhere they place a pending order could act as a magnet and force price to come to it.
Order blocks could be Bullish or Bearish
1. Bullish Order Block
A Bullish order block can be spotted at the end of a down trend so the first bullish candle lower wick must be lower than that of the last bearish candle in the down trend
There should also be a GAP between the upper wicks of the first bullish candle and the third bullish candle. This means the second bullish candle should not have a wick
When this conditions are present, then you have found yourself an order block.
2.Bearish Order Block
This is similar to a bullish order block but the difference is that the bearish order block appears in an upward trend.
How I Trade Order Blocks
For me, when I spot an order block I place a pending order at the point and set my stop loss with a 1:2 risk to reward.
You need to spot an order block early because it can only be used once.
