What is ICT Order Block?
Satheesh V
3/3/20255 min read
Introduction
Do you want to master ICT order block trading strategy like a pro to level up your trading? The ICT order block trading strategy is one of the most powerful concepts in technical analysis, helping traders predict the future movement of assets like forex currency pairs, commodities, cryptocurrencies, stocks, or indices with high accuracy. Originating from Smart Money Concepts (SMC) in forex trading, order blocks play a crucial role in institutional trading strategies. In this comprehensive guide, you will learn everything about order block trading strategy for beginners and advanced traders, including their definition, formation, identification, and usage, supported by visual examples.
What is an ICT Order Block?
An order block is a key zone on a price chart where institutional traders place large orders, causing a significant price movement. These areas serve as footprints of big players such as banks and hedge funds. Retail traders can follow these institutional footprints by identifying ICT order block zones and trading strategies and executing trades accordingly.
Market movements are classified into two types:
Bullish Order Block – Occurs before a strong bullish move.
Bearish Order Block – Occurs before a strong bearish move.
Let's explore each in detail.
Bullish Order Block
A bullish order block is the last bearish candle before a strong bullish move. It typically consists of two candles:
The first candlestick is bearish.
The second candlestick is bullish and engulfs the previous bearish candle.
Characteristics of a Valid Bullish Order Block
To identify a valid bullish order block, check for:
The bullish candle must grab the low of the previous bearish candle (price must go below the low of the first candle).
The bullish candle must close above the high of the previous bearish candle.
Imbalance in lower timeframes within the order block zone.
Market structure shift using order blocks in the lower timeframe.
In summary, the second candle should completely engulf the first candle, both in body and wick.
Bearish Order Block
A bearish order block is the last bullish candle before a strong bearish move. It also consists of two candles:
The first candlestick is bullish.
The second candlestick is bearish and engulfs the previous bullish candle.
Characteristics of a Valid Bearish Order Block
To identify a valid bearish, check for:
The bearish candle must grab the high of the previous bullish candle (price must go above the high of the first candle).
The bearish candle must close below the low of the previous bullish candle.
Imbalance in lower timeframes for order block trading strategy within the order block zone.
Structure shift using order blocks in the lower timeframe.
Again, the second candle should completely engulf the first candle, both in body and wick.
How to trade Order blocks?
Bullish Reversal Order Block Trading Strategy
In the bullish reversal order block trading strategy, traders look for a trend reversal from bearish to bullish and then execute a buy trade at a bullish order block.
Steps to Trade a Bullish Order Block:
Identify a bearish trend approaching a demand zone in forex and crypto.
Look for a market structure shift using ICT order blocks to the upside.
Find the order block at the bottom of the impulse move that shifted the trend.
Wait for the price to retest the bullish order block zone.
Enter a buy trade using ICT order block strategy when price tests the order block.
Place a stop-loss 10-20 pips below the low of the order block.
This strategy ensures traders capitalize on institutional buying activity.
Bearish Reversal Order Block Trading Strategy
In the bearish reversal order block, traders look for a trend reversal from bullish to bearish and then execute a sell trade at a bearish order block.
Steps to Trade a Bearish Order Block:
Identify a bullish trend approaching a supply zone.
Look for a market structure shift to the downside.
Find the order block at the top of the impulse move that shifted the trend.
Wait for the price to retest the bearish order block zone.
Enter a sell trade using ICT order block strategy when price tests the order block.
Place a stop-loss 10-20 pips above the high of the order block.
This strategy allows traders to align with institutional selling activity.
Key Takeaways
ICT order blocks in forex and crypto trading represent institutional orders and indicate key price levels.
Bullish order blocks signal strong buying pressure before an upward move.
Bearish order blocks indicate strong selling pressure before a downward move.
Reversal trading using order blocks in forex and crypto allows traders to enter trades with high accuracy.
Trending market order block trading strategy helps confirm trend strength and add new positions.
Mastering ICT order block trading strategy for forex, crypto, and stocks can significantly improve trading accuracy and risk management. By following these strategies, you can trade like institutional investors and gain an edge in the markets.
Final Thoughts
The ICT order block trading strategy is a powerful tool for traders who want to align with institutional market movements. By understanding bullish and bearish order blocks, traders can identify high-probability trade setups, manage risk effectively, and improve their overall profitability. Whether you're trading forex, crypto, stocks, or commodities, mastering ICT order blocks in trading will give you a deeper insight into market behavior.
Ready to take your trading to the next level? Start identifying and trading order blocks in forex and crypto today!
How to use Order Blocks in a Trending Market?
Order blocks are not only useful for reversals but also in a trending market. Traders can use them to confirm trend strength and add new positions:
Bullish Trend:
After a bearish pullback, a bullish order block forms, confirming trend strength.
Traders can enter a buy trade using an ICT order block and ride the bullish trend.
Bearish Trend:
After a bullish pullback in, a bearish order block forms, confirming trend strength.
Traders can enter a sell trade using an ICT order block and capitalize on the bearish move.
