I just realized that the order block is one of the most overlooked concepts in technical analysis, but it has tremendous power if you know how to use it.

An order block is essentially another way to look at supply and demand zones. Instead of just drawing regular support and resistance lines, order blocks help you identify more precise entry points, whether for reversal or continuation trades. Simply put, what is an order block if not the last candle before a strong price move near a support or resistance level?

There are two types of order blocks you need to remember. The first is the Bullish Order Block (BuOB) — a bearish candle that appears near the support level just before a strong upward move. You often see this in uptrends. The second is the Bearish Order Block (BeOB) — a bullish candle near resistance before a sharp decline. Use this in downtrends.

When you identify a bullish order block on the chart, you'll notice a strong bullish engulfing candle immediately afterward. That’s a signal to enter a trade. Conversely, a bearish order block will be followed by a strong bearish engulfing candle. Entry, stop loss, and take profit levels are quite clear once you understand market structure.

But the issue is, you shouldn't always trade based on order blocks. It heavily depends on the overall market structure. You need to understand market structure and Dow Theory to know when an order block setup is truly strong.

In summary, an order block is a highly important supply/demand zone. When the price reaches a bullish order block in an uptrend, it’s a buying opportunity. When the price hits a bearish order block in a downtrend, it’s a selling opportunity. It’s not complicated, but its effectiveness really depends on your ability to read market structure. This is just for reference and not investment advice.