Orderblock in Crypto Trading: From Recognition to Practical Application

What Is an Orderblock in the Trading World?

Orderblock (OB) is an essential concept that traders should master. It represents important price zones – areas where large traders have previously concentrated their orders. When the price returns to these zones, it often creates notable trading opportunities.

To explain more simply, an orderblock is a region used to find optimal entry points for two types of strategies: reversal entry (when the price will change direction) or continuation entry (when the price will continue the current trend).

Technically, an orderblock is formed from a (single candle) or a (group of candles) just before a strong price movement near Support or Resistance zones. This is when large investors accumulate or distribute their positions.

Two Main Types of Orderblocks

When analyzing the crypto market, we encounter two basic types of orderblocks:

Bullish Orderblock (BuOB): Appears when a red (decreasing) candle forms near the Support level before a strong upward move. In an uptrend, BuOB is a positive buy signal. The strong bullish candle following this orderblock often appears as a Bullish Engulfing, indicating strong buying pressure.

Bearish Orderblock (BeOB): Conversely, this is a green (increasing) candle that appears near Resistance before a significant price drop. In a downtrend, BeOB is an ideal sell zone. The subsequent strong bearish candle often appears as a Bearish Engulfing, reflecting selling pressure.

How to Recognize and Trade with Orderblocks

Locating a Bullish Orderblock:

• Look for a red (decreasing) candle near a key support level
• Observe a strong green (increasing) candle appearing immediately afterward
• Enter around the orderblock area, set Stop Loss below Support, and determine Take Profit based on higher price targets

Locating a Bearish Orderblock:

• Find a green (increasing) candle near a major resistance
• Wait for a subsequent strong red (decreasing) candle
• Enter in the orderblock zone, set Stop Loss above Resistance, and set Take Profit at lower price levels

When to Trade and When Not to Trade Orderblocks?

The key to success with orderblocks lies in understanding Market Structure Market Structure. Not all orderblocks are worth trading. You need to analyze them within the context of the larger trend, swing highs/lows, and key support/resistance points.

Orderblocks are most effective when:

• They form at historically significant price levels
• The price interacts with them within a clear trend
• They are confirmed by other supporting indicators or strong market structure

Summary of Orderblocks

Orderblock is a powerful tool but not the only answer to the market. It is a clearly defined Supply/Demand zone where buying or selling pressure is likely to emerge.

A simple strategy: When the price returns to a Bullish Orderblock in an uptrend, consider buying. When the price reaches a Bearish Orderblock in a downtrend, be ready to sell. However, always confirm by analyzing the overall market structure before making decisions.

Note: This is technical reference information aimed at providing knowledge about orderblocks. It is not investment advice. Each trader should conduct thorough research and manage risks appropriately according to their personal situation.