01Definition
A bullish order block is the last down-close candle before a displacement higher that breaks structure. A bearish order block is the last up-close candle before a displacement lower that breaks structure. The candle’s range (often its body) becomes a zone of interest.
02Validation checklist
- Displacement: the move away is fast and large, not a slow grind.
- Break of structure: the move breaks a meaningful swing.
- Imbalance: it leaves a fair value gap behind.
- Unmitigated: price has not yet returned to the block.
- Location: bullish OBs in discount, bearish OBs in premium.
Mean threshold
(OB high + OB low) ÷ 2
A close beyond the mean threshold weakens the block.
Pro insightBreaker blocks
When price closes through an order block, it fails. A failed bullish OB often becomes resistance on the retest — a breaker block. Failure is information too.
Key takeaways
- Bullish OB = last down candle before bullish displacement; bearish OB = last up candle before bearish displacement.
- Valid OBs break structure and leave imbalance.
- The mean threshold (50%) is a key reference.
- Failed OBs can become breaker blocks.
Common mistakes
- Marking every opposite-coloured candle as an OB
- Ignoring whether the move broke structure
- Trading OBs that have already been mitigated several times
Complete “Fair Value Gaps” to unlock this challenge.