The Order Block: Explained Simply

An order block is a demand zone that forms when price makes a sharp upward impulse from a specific area of consolidation or a single down candle.

What forms an order block

Price first consolidates or prints a down candle, then leaves that area with a strong bullish impulse. The last down candle or the base of the consolidation before the impulse becomes the order block. The impulse itself is what validates the zone; without it, the area remains unmarked.

The three rules that keep it valid

The impulse must occur after the base forms. A close below the order block invalidates it and removes the zone from consideration. No measured move or target is applied to the block; it is used only as a reference area for potential support on a later retest.

The common error

Traders often mark every down candle as an order block. A rectangle drawn around isolated bearish candles without a subsequent impulse move has no structural significance and should not be treated as a demand zone.