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Lesson 03 of 17 Order Blocks
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ICT CONCEPTS
03 17

ICT Concepts · Lesson 03

Order Blocks

Learn how traders identify the final opposing candle before strong displacement and turn it into a zone of interest.

  • Intermediate
  • Interactive charts
  • Lesson 03 of 17
01

What Is an Order Block?

You already know how to spot an imbalance: a Fair Value Gap, from Lesson 01. Now we look at where a strong move starts.

In ICT and SMC-style analysis, an Order Block is a price zone associated with the final opposing candle before a strong directional move. The framework this lesson follows looks for a calm consolidation, then an impulsive break away from it.

Why that candle? In this framework, traders interpret the zone as an area where meaningful buying or selling interest may have been present. Some traders describe it as many resting orders sitting there. That is an interpretation. A price chart cannot prove it.

Order Block

The final opposing candle before significant displacement, used as a zone of interest in ICT/SMC analysis.

Spot the Order Block

Which candle created the bullish order block? Look at the move, then look one step back.

Educational example
Try to find it first. Then press Reveal. Constructed teaching data, not real market data.
02

Where Order Blocks Come From

Start with balance. During consolidation, buyers and sellers are roughly even, and price moves sideways.

Then one side takes control. Price expands quickly in one direction. That fast move is displacement.

Now look immediately to the left of it. The last candle that pointed the other way is the one the framework marks.

Notice that the candle matters because of what happened after it. Without the strong move, a random bearish or bullish candle should not automatically be called an Order Block.

From balance to block
  1. CONSOLIDATION
  2. OPPOSING CANDLE
  3. DISPLACEMENT
  4. ORDER BLOCK
03

Bullish Order Block

Bullish
  1. Find consolidation, or balanced price action.
  2. Find strong bullish displacement.
  3. Go back to the final bearish candle before that move.
  4. Use that candle as the bullish Order Block.
Bullish rule
  1. CONSOLIDATION
  2. LAST BEARISH CANDLE
  3. BULLISH DISPLACEMENT
  4. BULLISH ORDER BLOCK
Old role
Origin of the move
New role
Potential support on a retest
HIGH LOW ZONE = HIGH TO LOW

This lesson uses the entire candle, from its high to its low, as the zone.

A Bullish Order Block, Step by Step

Find the candle, draw the zone, then watch what happens if price returns.

Educational example

Constructed example. A reaction is not a guarantee. Real markets may stall or pass straight through.
04

Bearish Order Block

Bearish
  1. Find consolidation.
  2. Find strong bearish displacement.
  3. Go back to the final bullish candle before the move.
  4. Use its high-to-low range as the bearish Order Block.

Same logic, mirrored. First find the displacement, then look one candle back.

Bearish rule
  1. CONSOLIDATION
  2. LAST BULLISH CANDLE
  3. BEARISH DISPLACEMENT
  4. BEARISH ORDER BLOCK
Old role
Origin of the move
New role
Potential resistance on a retest

A Bearish Order Block, Step by Step

The inverse: a last green candle, a sharp drop, and a return.

Educational example

Mirrored constructed example. Not a guarantee of how any market behaves.
05

Bullish vs Bearish Order Blocks

Bullish OB
Previous candle
Bearish
Followed by
Bullish displacement
Interpretation
Potential support on a later retest
Bearish OB
Previous candle
Bullish
Followed by
Bearish displacement
Interpretation
Potential resistance on a later retest
Bullish OBLAST DOWN CANDLE
+ UPWARD DISPLACEMENT
= BULLISH OB
Bearish OBLAST UP CANDLE
+ DOWNWARD DISPLACEMENT
= BEARISH OB
06

How Do You Draw an Order Block?

Use the full range of the identified candle: from its high to its low. Shade all of it. Then extend the rectangle to the right.

Some trading communities draw it differently: just the candle body, open to low, open to high, or a refined zone on a lower timeframe. We will not teach those here.

For this course, we'll use the full high-to-low range so the rules remain consistent.

HIGH LOW SHADE THE WHOLE RANGE
07

Why Traders Watch the Retest

After displacement carries price away, traders may watch whether price comes back to the zone. The source describes trading in the direction the block implies, and looking for confirmation rather than acting on every touch.

A retest does not guarantee a reversal. It is a moment to pay attention.

In ICT/SMC terminology, traders often describe a return into an Order Block as mitigation. Keep it simple: price comes back into the zone.

The retest timeline
  1. OB FORMS
  2. PRICE DISPLACES
  3. PRICE RETURNS
  4. RETEST
  5. REACTION / FAILURE

Watch Price Approach the Zone

The chart pauses just before the retest. Decide what you would watch, then reveal.

Educational example

What would you watch here?

Guided observation, not trading advice. A retest may react, stall, or fail.
08

Not Every Order Block Is Equal

Traders often use these as additional context. None of them guarantees stronger performance.

Strong displacementA clear movement away from the zone.
Market structureThe move meaningfully changes or continues structure.
FVG / imbalanceThe displacement may also create a Fair Value Gap.
Liquidity contextObvious highs and lows nearby may matter.
ConfirmationPrice action after the retest can add information.
09

Order Blocks and Fair Value Gaps

Here is where Lesson 01 comes back. A strong displacement from an Order Block can also leave a Fair Value Gap.

So you may see the two together. They are different ideas, describing different parts of the same move.

One move, two zones
  1. ORDER BLOCK
  2. DISPLACEMENT
  3. FVG

Order Block and FVG, Together

Show one, then the other, then both.

Educational example

The order block comes from the origin candle. The FVG comes from the three-candle imbalance the displacement created.

Order Block vs FVG

Order Block
Defined from
A specific opposing candle
In the framework
Origin zone before displacement

OB = WHERE THE MOVE STARTED

Fair Value Gap
Defined from
Three-candle non-overlap
In the framework
Imbalance left during displacement

FVG = IMBALANCE LEFT DURING THE MOVE

10

When Does an Order Block Fail?

Traders do not all use the same rule, and the source article does not set one. So this lesson defines a simple, consistent rule:

  • A bullish OB is considered invalidated if price trades decisively below its lower boundary.
  • A bearish OB is considered invalidated if price trades decisively above its upper boundary.

A Valid Retest and a Failed One

Same block, two different returns. Toggle between them.

Educational example

Constructed example.
11

Why This Candle, and Not Every Candle?

Four bearish candles are marked below. Only one is followed by strong bullish displacement. Which one should be treated as the bullish Order Block in this simplified framework?

Knowledge check

Pick the candle

Which candle is the bullish Order Block?

?

Knowledge Check

Knowledge check

Check 1

Which candle defines the bullish Order Block?

Knowledge check

Check 2

What should you look for immediately before the move?

Knowledge check

Check 3

Is this automatically a bullish Order Block?

★

Your Turn

Find the Bullish Order Block

Four candles are lettered. One of them is the bullish Order Block.

Educational example

Which lettered candle is the bullish Order Block?

Pick a letter. If you are stuck, use Reveal Order Block.
!

Common Mistakes

Marking every opposite candle

Correction: Look for meaningful displacement after it.

Ignoring the move away

Correction: The displacement is what gives the candle relevance.

Confusing OB with FVG

Correction: OB = origin candle zone. FVG = three-candle imbalance.

Assuming every retest will bounce

Correction: The zone may fail.

Using different zone rules randomly

Correction: Choose a consistent definition while learning.

12

Where Can Order Blocks Appear?

The source says traders apply Order Blocks across timeframes and markets. The pattern is about price behaviour, so it can show up anywhere price trades.

1m5m15m 1H4HDaily
ForexFuturesCryptoStocks

Lower timeframes can create more frequent signals and more noise. Higher timeframes may provide broader structural context. No timeframe is guaranteed to work better.

13

An Order Block Is Not a Trade by Itself

StructureLiquidity FVGTrend ConfirmationRisk management
✓

What You Learned

  • Order Blocks are identified around the origin of displacement.
  • A bullish OB is often the last bearish candle before bullish displacement.
  • A bearish OB is often the last bullish candle before bearish displacement.
  • This lesson uses the full candle high-to-low as the zone.
  • Retests may be watched, but reactions are not guaranteed.
  • Order Blocks and FVGs describe different parts of the same price move.
Key rule

First find the displacement. Then look to the last opposing candle. Mark its range.

Bullish OBLAST BEARISH CANDLE
+ BULLISH DISPLACEMENT
Bearish OBLAST BULLISH CANDLE
+ BEARISH DISPLACEMENT

The whole lesson in one picture

Bullish
  1. Consolidation
  2. Last bearish candle
  3. Bullish displacement
  4. Bullish OB
  5. Retest
Bearish
  1. Consolidation
  2. Last bullish candle
  3. Bearish displacement
  4. Bearish OB
  5. Retest

All lessons

01Fair Value Gaps 02Inversion Fair Value Gaps 03 · You are hereOrder Blocks 04Breaker Blocks 05Break of Structure 06Change of Character 07Change of Character Plus 08Equal Highs 09Equal Lows 10Liquidity 11Liquidity Grabs 12Premium & Discount Zones 13Propulsion Blocks 14Liquidity Sweeps 15Change in State of Delivery 16Balanced Price Range 17Breakaway Gap

Further reading

Educational content only — not investment advice. Order Blocks are an ICT / SMC interpretation of price, not a proven market law, and a chart cannot show who placed which orders. All charts use constructed, illustrative data.