Trading glossary
What is an order block?
An order block is the last opposite-coloured candle before a strong move, treated as a zone where large orders may have been placed.
In smart money concepts, a bullish order block is usually the last red candle before a strong rally, and a bearish order block the last green candle before a strong drop. The idea is that large participants placed orders there, and price may react when it returns.
The concept overlaps with supply and demand zones. Its value, like any zone, depends on context: the trend, whether the move away broke structure, and whether the zone has already been revisited.
How traders use it
- Look for order blocks only where the move away was strong and broke structure.
- Treat the zone as an area of interest, not a guaranteed reaction.
- A zone that has been revisited and broken is no longer valid.
Example
Before a rally from 1.0700 to 1.0800, the last red candle was the 1.0705 to 1.0725 candle. That candle is the bullish order block. If price returns to 1.0705 to 1.0725, traders watch for buyers to step in.
Frequently asked questions
Is an order block the same as a supply or demand zone?
They are closely related. Order blocks use a specific candle; supply and demand zones are usually drawn around a wider base.
Do order blocks work?
Any zone can attract a reaction, but none guarantees one. Treat it as one input alongside structure and confirmation.
Related terms
Often confused with
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.