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Order Blocks in Forex Trading Guide

Order blocks are price levels where institutions, banks, and large traders have key support and resistance levels. They can be identified on the H1 timeframe by looking for candles with divergence in the TDI indicator and highs or lows that have not been breached. Fibonacci retracement levels drawn from swing highs to lows within the trend can help identify the optimal "sweet spot" entry and exit zones within an order block, which is between 61.8% and 78.6% retracement. Entering a trade at the order block identified on the H1 timeframe and using a lower timeframe like the M15 can help reduce risk by setting the stop loss within the order block range.

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1K views8 pages

Order Blocks in Forex Trading Guide

Order blocks are price levels where institutions, banks, and large traders have key support and resistance levels. They can be identified on the H1 timeframe by looking for candles with divergence in the TDI indicator and highs or lows that have not been breached. Fibonacci retracement levels drawn from swing highs to lows within the trend can help identify the optimal "sweet spot" entry and exit zones within an order block, which is between 61.8% and 78.6% retracement. Entering a trade at the order block identified on the H1 timeframe and using a lower timeframe like the M15 can help reduce risk by setting the stop loss within the order block range.

Uploaded by

daniel
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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  • What are Order Blocks?
  • Fibonacci Application
  • Conclusion

ORDER BLOCKS AND USAGE

Made by:

Gabriel Ríos
WHAT ARE ORDER BLOCKS?

To an extent, they are true support and resistance… They are price levels where institutions, banks and
big money pockets have key levels for grabbing premium price.

THE SETUP

For reasons of proper analysis, we focus on H1 to spot a good order blocks, which are as follow:

 Big candle:

 It’s high or low is not taken out:


 Has divergence in TDI:

 Enters the sweet spot in Fibonacci (being the range of 61.8 and 78.6; the sweet spot is the
average of both:
FIBONACCI APPLICATION

Although textbook says that we use swing low to swing high (for an uptrend) and swing high to swing
low (for a down trend) to when the trend has changed, this will take too much for us to wait for that to
complete.

Given that Fibonacci per se is a fractal thing, it works also in the minor swings of the overall trend:

So why wait if it is a known fact that charts are fractal? Who knows…

This is how we draw our fibo (in an uptrend, we take the swing low and drag it to the previous swing
high):
Counter trends also work but the best risk reward ratio will come if we follow the overall trend. Here is
the example of the same spot for a counter (in this one, we would have to draw from top to bottom on
the same swing points):

Now let’s remember that we are basing the approach on H1 and the SL is somehow big, right?

Well, we can shorten our risk if we go lower in timeframes.

This is the same spot in M15:

Notice how price reaches the sweet spot and then reacts to it!
What could happen if we do a fibo within the H1 fibo? We lower our exposure of our SL!

Zooming in in our area of interest:

If we remove the fibos and leave only the range of both sweet spots, we have this:

So in short, if we draw our order block in H1 and go lower to M15 and its own order block falls within
the H1 one, this means game over. We will maximize our profit and lower our exposure!
Since our entry zone is the black box inside the big blue one, our SL could be either 4.5 pips (to the red
line) or 9 pips (to the outer limit of the blue box:

I did not included the TDI captures because on these levels of entry, you have them in extremes.
However, this is the example of the boxes above and how they look in TDI:
This is how I use order blocks.

Any questions or comments, if you have this, you know how you can reach me 😉

ORDER BLOCKS AND USAGE Made by: Gabriel Ríos
WHAT ARE ORDER BLOCKS? To an extent, they are true support and resistance… They are price levels where institutions, banks
 Has divergence in TDI:  Enters the sweet spot in Fibonacci (being the range of 61.8 and 78.6; the sweet spot is the
FIBONACCI APPLICATION Although textbook says that we use swing low to swing high (for an uptrend) and swing high to swing
Counter trends also work but the best risk reward ratio will come if we follow the overall trend. Here is the example of the
What could happen if we do a fibo within the H1 fibo? We lower our exposure of our SL! Zooming in in our area of interest:
Since our entry zone is the black box inside the big blue one, our SL could be either 4.5 pips (to the red line) or 9 pips (
This is how I use order blocks. Any questions or comments, if you have this, you know how you can reach me 😉

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