In the previous article about imbalance I mentioned Order Block in passing, as its frequent neighbor on the chart. Let me cover Order Block on its own, because it usually gets explained loosely: "the last candle before the move" is only half the picture.

A real Order Block starts with a liquidity sweep. A candle pokes through the previous low (or high) with a long wick, collects the stops sitting behind that level, and closes back inside the range, often with a small body. That wick is the first tell: if the body is large and there is barely any wick, that is not a sweep, it is just a regular impulsive candle.

Right after the sweep, the market reverses with a sharp move that almost always leaves an imbalance behind it, a gap between the wick of the sweep candle and the wick of the third candle. Order Block, sweep, and imbalance travel together as one sequence, not as separate events. If you only see a strong candle with no sweep before it, it is probably not an OB, just an impulse without structure behind it.

A bullish OB is a candle that swept liquidity below a low (a long lower wick), after which the market moved up. A bearish OB is the mirror image: a wick up, liquidity swept above a high, then a move down.

I mark the actual Order Block zone by the sweep candle's body, not the whole wick, the body is what shows where a large participant's unfilled orders realistically sit. The zone projects to the right and stays active until price comes back and works through it.

When price returns into the OB zone, that is called mitigation. Often the imbalance gets filled first, and only after that does price reach the Order Block itself, two separate, if closely related, events.

Common marking mistakes:

  • Marking any large candle, with no sweep in front of it.
  • Ignoring the wick, even though it is exactly what shows the liquidity sweep.
  • Drawing too many OBs in a row instead of one key one.
  • Confusing an OB with an imbalance, even though they are different objects.

I covered the difference between Order Block and imbalance in detail in a separate article: Imbalance (FVG)

The SMC Structure / OB / IDM indicator maps Order Blocks automatically together with sweeps and structure: kovalev.trade/shop

I will review your markup and show the real OBs on your chart: kovalev.trade/trading

#trading #smartmoney #orderblock #liquidity #sweep