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Order Blocks - Institutional Entry Zones

Understanding where smart money enters positions.

What is an Order Block?​

An order block is a price zone where institutional traders placed significant orders. Think of it as a "parking spot" where smart money entered positions.

These aren't random price levels - they're specific candle formations that indicate large-scale buying or selling.

Why Order Blocks Matter​

When price returns to an order block:

  1. Institutions may add to positions - They often scale into trades
  2. The level acts as support/resistance - More significant than traditional S/R
  3. Retail stops get triggered - Creating liquidity for institutions
  4. High-probability reversal zones - Price often reacts at these levels

Types of Order Blocks​

Bullish Order Block (Green)​

Definition: The last down candle (or series of candles) before a strong up move.

Characteristics:

  • Appears before impulsive buying
  • Acts as support when price returns
  • Institutions were accumulating here

Visual: Green shaded rectangle on Stryk charts

     Price
       ↑
       │    ████████  ← Strong move up
       │    ████
       │ ▓▓▓▓      ← Bullish Order Block (last red candle)
       │ ▓▓▓▓
       │
       └──────────→ Time

Bearish Order Block (Red)​

Definition: The last up candle (or series of candles) before a strong down move.

Characteristics:

  • Appears before impulsive selling
  • Acts as resistance when price returns
  • Institutions were distributing here

Visual: Red shaded rectangle on Stryk charts

     Price
       ↑
       │ ▓▓▓▓      ← Bearish Order Block (last green candle)
       │ ▓▓▓▓
       │    ████
       │    ████████  ← Strong move down
       │
       └──────────→ Time

Reading Order Blocks in Alstrum​

In Volt Table​

Look for the OB badge on signal rows. This indicates an active order block near current price.

In Stryk Charts​

Order blocks appear as shaded rectangles:

  • Green zone: Bullish order block (expect support)
  • Red zone: Bearish order block (expect resistance)
  • Label: "Bull OB" or "Bear OB" in corner

Order Block Data​

When you hover or click:

  • Price: Center of the order block
  • High/Low: Upper and lower bounds
  • Distance %: How far current price is from the block
  • Strength: Strong, moderate, or weak

Trading with Order Blocks​

Entry Strategy​

  1. Wait for price to reach the block

    • Don't front-run or anticipate
    • Let price come to your level

  2. Look for confirmation

    • Rejection candle (wick into zone, close outside)
    • Volume spike
    • Lower timeframe structure break

  3. Enter on confirmation

    • At the close of confirmation candle
    • Or at a retest of the break

Stop Loss Placement​

Critical: Set stops beyond the order block, not inside it.

  • For bullish OB: Stop below the low of the zone
  • For bearish OB: Stop above the high of the zone
  • Add buffer for wicks (ATR-based)

Take Profit Targets​

Logical targets:

  • Opposite order block
  • Previous swing high/low
  • Next liquidity level
  • Fair value gap

Order Block Quality​

Not all order blocks are equal. Higher quality blocks have:

Strong Order Blocks​

  • Followed by impulsive move (3+ candles)
  • Clear break of structure
  • Higher timeframe alignment
  • Unmitigated (never been tested)

Weak Order Blocks​

  • Small move after formation
  • Already been tested multiple times
  • Against higher timeframe trend
  • In ranging/choppy market

Common Mistakes​

1. Trading Every Order Block​

Fix: Filter by quality and confidence. Only trade clear, strong blocks.

2. Setting Stops Inside the Block​

Fix: Stops go beyond the entire zone. Wicks will test the block.

3. Ignoring the Trend​

Fix: Order blocks work best with trend. Bullish OB in uptrend > bullish OB in downtrend.

4. Front-Running the Level​

Fix: Wait for price to actually reach the block. Patience beats anticipation.

5. No Confirmation​

Fix: Don't enter blind. Wait for a reaction (rejection candle, volume, structure break).

Confluence is Key​

Order blocks are stronger when combined with:

Confluence FactorImpact
High ML confidence (70%+)Higher probability
Fair value gap in same directionMultiple reasons for reaction
Trend alignmentWith the flow
Higher timeframe OBMajor institutional level
Liquidity sweep firstStop hunt completed

Example Trade​

Setup: AAPL showing STRONG_BUY (82% confidence) with OB badge

Analysis:
- Daily bullish order block at $175.20-$176.80
- Price currently at $178, pulling back
- FVG overlaps with OB zone
- Uptrend on higher timeframes

Trade Plan:
- Entry: $176.00 (middle of OB)
- Stop: $174.50 (below OB with buffer)
- Target 1: $182 (previous high)
- Target 2: $185 (next OB)
- Risk/Reward: 1:3

Practice Exercises​

  1. Identify order blocks on your favorite stocks
  2. Mark previous reactions - Did price respect the blocks?
  3. Paper trade using OB levels
  4. Journal results - What worked? What didn't?

Next Steps​