Order Block

An Order Block is the last bearish candle before a sustained bullish move, or the last bullish candle before a sustained bearish move. The thesis is that institutions absorbed opposing orders at this level to fill large positions before driving price away, and they will defend the same zone on retest.

Order Blocks are typically identified on higher timeframes (4H, Daily) and used as zones, not single prices, the open-to-close range defines the zone, with the wick acting as a deeper mitigation level. Practitioners distinguish between "mitigated" and "unmitigated" order blocks; once price has returned and rejected from the zone once, it's considered mitigated and weaker on subsequent tests. Stronger Order Blocks form at confluent levels. Swing highs/lows, FVG overlaps, or structural break points.