Order blocks the ICT way: the last opposing candle before the move
Order blocks are widely misused, so this module gives the strict ICT definition and the conditions that make one worth trading. An order block is the last opposing candle before a displacement move: the final down candle before price runs up, or the final up candle before price runs down. On its own that is just a candle. What makes it an order block is what follows: real displacement, a prior liquidity raid, and often a fair value gap left alongside it. Draw it precisely and use the mean threshold for entries.
The ICT definition of an order block
An order block is the last candle against the direction of the move that follows. A bullish order block is the last down candle before a strong up move; a bearish order block is the last up candle before a strong down move. The idea is that this candle holds the resting orders that fuelled the move, so when price returns to it, those orders defend the level again. The candle alone means nothing; the move away from it is what certifies it.
Drawing the bullish order block
For a bullish order block, take the last down candle before the up move and draw a zone from its high to its low, sometimes using the open-to-low body depending on how aggressive you want the entry. Price returning into that zone is your signal to watch for a long, in line with bias. The high of the block is the shallowest touch; the low is the deepest. If price blows straight through the low and closes below, the block has failed and you stand aside.
Drawing the bearish order block
For a bearish order block, take the last up candle before a down move and draw a zone from its low to its high. A return into that zone is where you watch for shorts in a bearish draw. The same failure rule applies: a clean body close above the block invalidates it. Pair the bearish block with a SIBI above and a prior sweep of buy-side liquidity and you have a high-quality short array rather than a lone candle.
What makes an order block valid
Three things separate a real order block from any random candle. First, displacement: the move away must be energetic, ideally leaving a fair value gap. Second, a liquidity raid: the best blocks form right after price swept a high or low, so the block is where the reversal began. Third, a break of structure in the new direction after the block forms. If a candle has all three behind it, it is an order block. If it is just the last candle before a drift, it is not.
The mean threshold
The mean threshold is the 50 percent of the order block, the midpoint between its high and low. ICT uses it the same way as consequent encroachment in a gap: price often reacts at the midpoint rather than the far edge, so entering around the mean threshold gives a tighter stop just beyond the block. If price trades decisively past the mean threshold and toward the far edge, the block is weakening and you tighten or stand aside.
Rejection versus breach on gold
When price returns to an order block on gold, you want to see rejection: a wick into the zone and a close back out, ideally with a lower-timeframe shift in your favour. A slow grind that sits inside the block and closes through it is a breach, and breached blocks usually fail. Refine the block on a lower timeframe for a cleaner entry: a daily order block often contains a tidy H1 block or fair value gap you can time the entry from. Always trade the block in the direction of the higher-timeframe draw, never against it.
FAQ
What exactly is an ICT order block?
It is the last opposing candle before a displacement move. A bullish order block is the last down candle before a strong up move; a bearish order block is the last up candle before a strong down move. The candle is only an order block if real displacement follows it.
How is an order block different from a supply or demand zone?
They overlap, but ICT is stricter. An order block must be the specific last opposing candle before displacement, ideally formed right after a liquidity raid and followed by a break of structure. A generic supply or demand zone has no such conditions.
What is the mean threshold of an order block?
It is the 50 percent midpoint of the block. Price often reacts there rather than at the far edge, so entering around the mean threshold gives a tighter stop just beyond the block.
How do I know an order block has failed?
A clean body close through the far edge of the block invalidates it. For a bullish block that is a close below its low; for a bearish block, a close above its high. A slow grind that sits inside and closes through is a breach, and breached blocks usually fail.
Which order block do I trade when there are several?
Favour the one that formed right after a liquidity raid, left a fair value gap, and sits in line with your higher-timeframe draw. Refine it on a lower timeframe for the entry. Ignore blocks that point against the bias.