There are two types of order blocks:
01 Bullish Order Block
The range of the last bearish candlestick before a bullish impulsive wave that breaks the market structure, making a higher high, represents the bullish order block zone. When the price returns to this OB zone, it will hold the price higher.
The break of the market structure in a bullish direction is necessary as it will confirm that the market wants to go higher. This confluence will help to spot only high-probability zones. Besides BMS, also make sure that the overall market trend is bullish.
The range of the last bullish candlestick before a bearish impulsive wave that breaks the market structure, making a lower low, shows the bearish order block zone. To continue the previous trend, the price will return to this order bock to fill the pending orders, and then the market will continue the previous bearish trend.
You should take the high and low of the bearish/bullish candlestick to draw the order block zone.
Example #1
Analyze the daily timeframe chart of AUDUSD, price was making lower lows. It was breaking the market structure in a bearish direction. After a few bearish swings, the price broke the market structure higher. Then, we highlighted the zone using the last bearish candlestick before the bullish impulsive wave.
The next price returned to the Order block zone exactly and started a new bullish trend. So, by using high-probability order blocks, we can ride the big trend in the market.
Below is the BTCUSD 15M chart. Analyze that price was making higher highs and breaking the market structure higher. After a few bullish swings, the price broke the market structure in a bearish direction, making a low. Then, we highlighted the order block zone using the high and low of the last bullish candlestick.
Next, the price returned to that bearish order block zone filled the pending sell orders and then started the bearish impulsive wave.
Using this strategy, we can ride the trend created by market makers.
