Order Blocks — The Footprints of Institutions

Once Smart Money has collected liquidity and entered its position — it leaves a "footprint" on the chart.

That footprint is called an Order Block (OB).

What is an Order Block

An Order Block = the last opposite-side candle before price moves violently.

- A bullish order block = the last red candle before price surges up hard - A bearish order block = the last green candle before price surges down hard

Why must it be the last opposite-side candle?

Follow the logic — Smart Money wants to buy an enormous amount.

When will it buy? — while the market is still selling (price still falling), because that is when there are sell orders for it to buy.

The last red candle before price surges up = the candle where retail is still "selling" = the candle where Smart Money "bought against them."

Inside that red candle, an enormous institutional buy order is hidden — and it cannot buy it all in one go, so it leaves orders pending.

When price comes back to that Order Block again → the pending orders fire → price tends to bounce from that zone.

This is why an Order Block is a precise entry point — you enter at "the same place the institution entered."

How to find an Order Block — 4 steps:

Step 1 — find the "violent move" that caused a BOS Look for the point where price runs so hard it breaks the structure (Break of Structure).

Step 2 — go back to the last opposite-side candle Before that surge up — the last red candle is the bullish OB. Before that surge down — the last green candle is the bearish OB.

Step 3 — draw a box covering that candle From the high to the low of the OB candle (some schools use only the body — start with the full range first).

Step 4 — wait for price to come back and test it When price returns to the OB box = a point to watch for an entry.

A "high-quality" Order Block — 3 conditions:

1. It must cause a BOS — an OB whose move breaks the structure = an OB the institution actually used. An OB whose price barely moves out and breaks nothing = weak.

2. It should come with a liquidity sweep (linking to Chapter 2) — an OB that forms after price has gone to sweep liquidity first = the most powerful, because it is the complete story: the institution collects liquidity → enters its position (creates the OB) → drives price until a BOS.

3. It has not been tested yet (fresh / unmitigated) — an OB price has not returned to touch = the orders are still fully pending. An OB that has been touched = the orders have been used, it weakens.

The full setup — assembling Chapters 2+3:

1. Identify a swing low with liquidity (Chapter 2) 2. Price surges down to sweep the liquidity below that swing low 3. Then reverses up hard until a BOS (breaks structure to the upside) 4. Find the bullish OB — the last red candle before that surge up 5. Wait for price to pull back to the OB 6. Enter buy at the OB · SL below the OB (or below the sweep point) · TP at the next liquidity

This is the classic SMC setup — known as "Sweep → BOS → OB retest."

> An Order Block is not a "magic line" — it is logic: where the institution entered its position there are pending orders · price returns = the orders fire · you just enter at the same place it did

Next chapter — the void price leaves behind and tends to come back to fill: the Fair Value Gap