If you are seriously engaged in technical analysis, sooner or later you will come across the concept of an order block. It is one of the most useful things for understanding where large players—banks, institutions, market makers—actually place their positions.

In a nutshell: an order block is an area on the chart where a huge number of buy or sell orders are concentrated. When the price passes through such an area, a sharp movement occurs. This is not a coincidence; these are traces of big money activity.

What does this look like in practice? Usually, an order block forms right before a strong impulse. Do you see the last candle that moves against the main trend? That is often the beginning of an order block. If there was a bearish candle before a rise, it’s a bullish order block. If there was a bullish candle before a fall, it’s a bearish order block.

There are several types of order blocks. Let’s start with the most basic—an ordinary order block. It’s simply an area where big players concentrated their orders before a move. When the price returns here, it often bounces. The bullish version acts as support, the bearish as resistance. On the chart, you can see a decrease in volume as the price approaches such an area, then consolidation, and then—boom—a strong impulse.

Next, it gets more interesting. There is an absorbed order block—that’s when the price breaks through a level and continues moving in the opposite direction. Orders in this zone are simply absorbed by a stronger move. This signals a change in market structure. If there was a bullish order block absorbed downward, now sellers dominate. If it was a bearish one absorbed upward, buyers take control.

But there’s another thing I find very interesting—breaker blocks. This is manipulation at a higher level. The price breaks a level, takes liquidity (triggering retail traders’ stop-losses), and then sharply reverses. A classic false breakout. Breaker blocks show how big players hunt for stop orders to then move the price in their desired direction.

Practical application? First, an order block helps find entry points with low risk. When the price returns to such an area, it’s often a good opportunity. Second, it’s an ideal place for stop-losses—the level that the market respects. Third, an order block helps understand where big players are accumulating or distributing positions.

What’s important to remember: an order block is not magic; it’s simply a visualization of where large money interest was. Combine this with volume analysis, market structure, and you’ll gain a much better understanding of where the price might go. The main thing is not to confuse support and resistance with the order block itself, although they often coincide.