Order Block

In smart money language, a bullish order block is the last down candle before a rally that breaks structure. A bearish order block is the last up candle before a selloff that breaks structure. The story is that the candle is where large orders were filled, and that price returns to finish or to defend that business. What you can actually mark is narrower. It is a candle, or its body, immediately before a displacement. The zone is a candidate. It becomes interesting if the impulse really did break a swing and if the zone lines up with a level you would have respected anyway.

Mark the candle only after the impulse has broken structure. A down candle before a small bounce is not an order block. It is a down candle. Draw the zone from the candle's high to its low, or from body open to body close if you want fewer touches. Then wait. A first return that rejects the zone, a wick into it and a close back out in the impulse direction, is the entry condition. A close through the zone invalidates it. Do not keep the box "mitigated but still valid" unless you have written a second rule. Most traders widen the definition until the zone cannot lose.

A bullish order block sits under a rally that took out a prior high. The long is a return into that last down candle, held by a rejection, with the stop under the zone or under the sweep that made the low. If the return slices through and closes below, the idea is wrong. The impulse already happened. You are trading the retest, not the breakout you missed, so the risk is that the retest does not hold.

A bearish order block sits above a markdown that took out a prior low. The short is a return into the last up candle that fails. A close back above the zone kills it. Selling the first touch in a higher-timeframe uptrend is the usual loss. The order block is a location inside a bias, not a reversal machine against the larger swing.

Marking order blocks on every timeframe and taking the one that fits the trade. Also calling a candle an order block when no structure broke afterward. And assuming the open of the candle is a precise institutional price. The "precision" is the open of a bar whose size you chose by choosing the timeframe.

Nothing in the candle proves a large order sat there. The same pattern is a breakout and a retest described in newer words. Zones from thin markets and from mid-range noise fail often. An order block does not include a target. You still need the next liquidity pool, the next swing, or a measured move to know where you are paid.