What is an Order Block? #
Order Blocks (OB) highlight price areas where more informed market participants have placed orders and which can be used as potential areas of support or resistance. They are automatically highlighted by the toolbox and disappear as soon as their significance is reduced.
Order blocks are divided into two types, bull order blocks and bear order blocks. Bullish OBs start near swing lows and can be used as potential support. On the other hand, the initial locations of bearish OBs are close to the swing highs and are used as potential resistance.
Institutional money algorithmically enters the market at key levels in steps known as order blocks. Rather than pouring hundreds of millions into the market at once all at once, institutional orders are broken down into multiple entries, creating tight consolidations that are seen just before an impulsive market move. This method leaves an institutional footprint on the chart that can be identified and exploited.
Swing & Internal OBs #
As with market structures, the toolkit divides OBs into two categories:
- Internal order blocks
- Swing order blocks
Basically we are looking for a Short position in a bearish OB and a Long position in a bullish OB. (first check market structure)
Internal order blocks are built up from the internal trends of a longer-term trend. They are considered less significant and may provide shorter-term support/resistance compared to swing order blocks. They are mainly used on shorter time frames.
Swing order blocks, however, are built from longer-term trends and can provide support and resistance in the event of longer-term price changes.
Each has a unique style to differentiate them, with swing order blocks having solid boundaries and solid average levels instead of dashed ones.
OB Activity PRO #
The toolbar can return different information about an order block. Internal activity examines bull and bear institutional activity within the interval used to construct the order block.
The OB institutional activity metric is displayed to the right of the order block, next to the most recent historical price band (last candle). This information represents the accumulated institutional volume within the interval used to construct the order block and can be useful in determining how significant an order block is, as larger institutional volume indicates a larger order block.
The percentage value on the right indicates how much the institutional volume of an order block represents of the total institutional volume of all order blocks displayed on the same category (internal/swing) chart, allowing a quick determination of which order blocks may be of most interest to look for.
Both volume data and ticker data are needed to display the data. Charts without volume data will not display the calculation.