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Order blocks are collections of orders from major banks and institutions that trade foreign exchange on the financial market. To increase the likelihood of profit, the big banks split a single order into a number of blocks rather than just opening a buy/sell order. In trading, these order groups are known as “order blocks.”

Order blocks work by creating a supply and demand imbalance in the market. When a large number of buy or sell orders are placed at a specific price level, it creates a significant level of support or resistance. This means that if the market reaches that price level again, it is likely to bounce off it and move in the opposite direction.

Identifying order blocks can be challenging, but it’s a crucial skill for traders. There are several ways to identify order blocks, such as:

1. Looking for clusters of candlesticks – Order blocks usually appear as clusters of candlesticks on the price chart. These clusters can be either bullish or bearish, depending on the concentration of buy or sell orders.

2. Identifying significant price levels – Order blocks are often found at significant price levels, such as previous highs or lows, Fibonacci retracements, or round numbers.

3. Observing market reactions – Traders can observe market reactions at specific price levels to identify order blocks. For example, if the market bounces off a particular price level multiple times, it’s likely that there is a cluster of orders at that level.

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