I've noticed that many people get confused about order blocks, even though they are quite an important tool for market analysis. Let's figure out what they actually are and how they work.

An order block is essentially a zone on the chart where major players—banks, institutions, market makers—concentrate their orders. When a large number of big orders accumulate in one place, it creates significant pressure on the price, causing it to move sharply. These zones usually form before an impulse: the last candle before a strong move, which goes against the main trend.

There are several types, and they operate differently. A bullish order block is a zone where buyers accumulated positions before a surge upward. When the price later returns to this area, it often bounces off as support. A bearish order block is the opposite: a zone where sellers opened shorts before a decline. If the price approaches it again, it acts as resistance.

But there are two more interesting variants. An absorbed order block is when the price breaks through a level and continues moving in the opposite direction, seemingly absorbing old orders. This indicates a change in market structure. And a breaker block is the trickiest. It’s a false breakout, where the price initially breaks the level—triggering retail stop-losses—but then sharply reverses. Large players manipulate liquidity to move the price in their desired direction afterward.

How to use this in trading? An order block is a great entry point. When the price returns to such a zone, the risk is low because the level has already been tested. Place your stop-loss outside the zone, and your take-profit in the direction of the expected move. These levels also help understand where big players are accumulating positions, giving insight into where the price might go next.

Main signs of a good order block: a clear level on the chart that the price respects—bounces off or breaks with force—noticeable volume changes, and consolidation before an impulse. If you see this combination, it often means something interesting is about to happen. Practice shows that these zones work especially well when combined with other analysis tools.