Editor's note: Smart Money Concepts is also examined in Articles 173, 193, 205. These are progressively deeper, standalone treatments of the same subject.
Encyclopedia Classification
Category: Advanced Trading • Institutional Analysis • Market Structure
Discipline: Smart Money Concepts • Order Flow • Supply & Demand • Price Action
Prerequisites
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Article 151 — Market Structure: Understanding How Crypto Markets Actually Move
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Article 152 — Advanced Price Action: Reading Candles, Momentum, and Market Intent
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Article 153 — Liquidity Analysis: How Markets Hunt Stops, Create Traps, and Move Capital
Related Articles
Fair Value Gaps • Liquidity Sweeps • Wyckoff Methodology • Volume Profile • Institutional Trading
Definition
An order block is a price area where significant institutional buying or selling activity is believed to have occurred before a strong market move.
Traders analyze order blocks as potential areas where large participants may:
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Enter positions
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Add to positions
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Defend previous trades
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Reverse price direction
Beginner Explanation
Most beginners see a chart like this:
Price drops.
Then suddenly:
Price explodes upward.
They ask:
"Why did price reverse there?"
Professional traders ask:
"Where did large buyers accumulate before the move?"
An order block attempts to identify that area.
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