Identify the candles where institutions loaded their positions.
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Overview
An Order Block (OB) is the last bearish candle before a bullish impulse move, or the last bullish candle before a bearish impulse move. The logic is that large institutions must execute their orders over time and often return to the price zone where they began their initial entry to add to or complete their position.
Bullish order blocks form when price makes a significant upward move: the last down-close candle before the impulse becomes the bullish OB. When price returns to that zone, institutional buyers are expected to re-enter, creating a support reaction. Bearish OBs work in reverse.
The strength of an OB increases when it is also coincident with a Fair Value Gap or when the move away from it was highly impulsive (large candles, expanding ranges, high volume). An OB that has been "mitigated" β meaning price has already returned and traded through it β is no longer valid and should be removed from analysis.
Order blocks are best used on higher timeframes (1H, 4H, Daily) to define the directional bias, then drill into lower timeframes (15M, 5M) to find precise entries within the OB zone. The stop-loss is placed just beyond the OB, providing a tight risk-to-reward ratio.
Strategy Code
This is a TradingView Pine Script strategy example for this page concept. Paste it into the TradingView Pine Editor, add it to your chart, and run it in the Strategy Tester.
//@version=6
strategy("Order Blocks Strategy", overlay=true)
emaFast = ta.ema(close, 20)
emaSlow = ta.ema(close, 50)
bullStructure = close > emaFast and emaFast > emaSlowThis is a thinkorswim ThinkScript strategy example for this page concept. Open thinkorswim, create a custom strategy, paste the script, and apply it to your chart.
def fast = ExpAverage(close, 20);
def slow = ExpAverage(close, 50);
def liquidityGrab = low < Lowest(low, 10)[1] and close > open;
def buySignal = close > fast and fast > slow and liquidityGrab;
def sellSignal = close < fast;Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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