Recently, I noticed that many traders get confused about the concept of order blocks, even though it is one of the most powerful tools for understanding where big players are building their positions. Let's figure out what's going on here.

An order block is essentially an area on the chart where banks and institutional investors have accumulated a huge number of orders. When the price returns to this zone, it often bounces off or passes through it. The key is to understand what type of block is in front of you.

There are three main options. The first is a regular order block. This is the last candle before a strong impulse, which moves against the main trend. For example, if the market is rising, a bearish candle often appears before a surge upward — this is a bullish order block. When the price then returns here, it’s a great entry point with low risk. I often use such zones to place stop-losses because they clearly act as support or resistance.

The second type is an engulfed order block. Here, the situation is more interesting. The price breaks through an old support or resistance zone, but not just passes by — it forcefully breaks the level and continues moving in the opposite direction. This shows that sellers or buyers had enough strength to suppress the old orders. The broken level often becomes a new resistance or support zone. Such moments are good indicators of a trend reversal.

The third is a breaker block, and in my opinion, this is the most interesting. Here, the price makes a false breakout. Initially, it breaks the level in one direction, as if continuing the trend, but then sharply reverses and moves in the opposite direction. This is a classic manipulation by large players — they trigger retail traders’ stop orders and then move the price where they want. A bullish breaker block is when the price breaks downward, absorbs liquidity below the level, and then suddenly surges upward. A bearish one works the opposite way.

I practically use it like this: when I see a breaker block, I wait for a retest of this zone. The price often returns to the broken level, and this is an ideal entry point. Signs of a breaker block include a quick, sharp reversal and no bounce from the level. If you see this, it’s usually a signal that the market structure is changing.

The main thing to remember: all three types — regular order block, engulfed, and breaker block — help identify where big players are working with the market. If you learn to see these zones, you will start understanding the market structure much better and be able to find entries and exits with much less risk.