What Is an Order Block in Trading? A Plain-English Definition

An order block is the last candle (or small cluster of candles) moving in one direction before price makes a sharp, structural move in the opposite direction. The idea comes from Smart Money Concepts (SMC) trading: that sharp move is read as a sign that large orders — institutional size — were absorbed at that price level, and price may return to that same level later to fill remaining orders before continuing.

Bullish vs. bearish order blocks

A bullish order block is the last down-close candle before a strong rally. A bearish order block is the last up-close candle before a sharp decline. In both cases, the logic is the same: the candle marks the origin of the move, not the move itself.

How to identify one on a chart

• Find a clear, strong directional move — a break of structure, not just normal chop.
• Look one or two candles back from where that move started.
• Mark the high and low of that candle (or the small cluster) as your order block zone.
• Watch for price to return to that zone later — a reaction there (not a clean pass-through) is what traders treat as confirmation.

The common mistake

Marking every candle before every move as an "order block" makes the concept meaningless. The moves that matter are the ones that actually break a prior swing high or low with conviction — a real structural shift, not routine volatility. An order block without a genuine break of structure behind it is just a candle.

How Scan Mode reads this

Scan Mode's structure detection looks for genuine order blocks the same way — tied to a confirmed break of structure, not every reversal candle — and weighs it as one factor among several (fair value gaps, liquidity sweeps, multi-timeframe confluence) in the confidence score. It is one input, not a signal on its own.

Educational content only. Not financial advice. Chart structure concepts do not guarantee any trading outcome.