I want to share a quite useful technical concept that many traders haven't fully exploited — that is, the order block. It’s essentially a different way of looking at supply and demand zones, but it helps you identify more precise entry points.

An order block is the last candle before a strong price movement, located near support or resistance levels. The concept sounds simple but is extremely powerful in practice. It allows you to find effective reversal entry opportunities or identify price zones that significantly influence trader psychology.

There are two main types of order blocks: Bullish OB (BuOB) and Bearish OB (BeOB). A bullish order block is a bearish candle that appears near a support level, followed by a strong upward move in an uptrend. Usually, this is followed by a strong bullish engulfing candle. Conversely, a bearish order block is a bullish candle near resistance, followed by a sharp decline in a downtrend, often followed by a bearish engulfing candle.

Identifying an order block isn’t too complicated. You just need to find the last candle before a strong price move, then set your entry, take profit, and stop loss based on that pattern. However, to trade effectively with order blocks, you need to understand market structure — that’s the key to knowing when to enter and when to avoid.

In reality, order blocks are very strong supply and demand zones. The basic strategy is: buy when the price returns to a bullish order block in an uptrend, and sell when the price hits a bearish order block in a downtrend. It’s a simple but effective logic.

This knowledge should be combined with Dow Theory and market structure analysis to maximize effectiveness. I see order blocks as a very valuable tool to learn, helping significantly improve your trading skills if applied correctly.