Every trader in the market consistently studies the market to know when to enter the market and which area to best position in the market. Due to the market structure and various impulsive structures of the market, many find it complex to know the area in which to position their trade.
As a trader who wants to make a profitable trade in the crypto market, you should understand how to trade with some level of professionalism. This is where the smart market concept [SMC] comes into play, which will boost your trading professionalism. Although SMC is an encompassing trading concept like liquidity and break-in market structure [BMS], Shift in market structure [SMS]; change of character [CHOCH]; order block [OB].
Hence, as a trader, you might choose to adopt any of the concepts as a trading strategy after you have learned and understood the various concepts. Nevertheless, one of the concepts is very paramount because it will serve as an instrument or point to enter and exit as a professional trader. Therefore, this concept is called the order block. Let's discuss ORDER BLOCK in this article.
What is an order block?
In the crypto ecosystem, a lot of money is being invested by traders, which the financial institutions breakdown into chunks. Instead of accumulating them in one space, they break them down into chunks based on the order, time frame, buy and sell, and trends.
Therefore, order blocks are specific areas of the market where traders significantly buy and sell. This simply implies that in the crypto ecosystem, what determines the market is how traders place demand and supply in the market; the order blocks are the point where the market decides whether to go bearish or bullish.
Investors apparently don’t joke with order blocks when they are analyzing trades because they know that market swings are solely determined by how traders accumulate the order blocks.
The order block can appear in various forms on the chart, like bearish trends, bullish trends, consolidation, support and resistance, and liquidity.
How does the order block form on the chart?
Demands and supplies from traders are distributed into chunks by financial institutions based on the time frame, trends, and order. This is why various trend lines appear on charts that are moving in different directions; it simply shows how trader demands are formed into order blocks. Therefore, order blocks appear in various characters on the chart, e.g., bearish, bullish, consolidation, liquidity, and demand and supply order blocks.
Bearish order block.
A bearish order block indicates a decline in market price, that is, when the market is swinging towards the sell side. It can also be said to be an impulsive move of the market toward the decline trend. At this point, the last bullish candle closes to create a bearish trend. When a bearish order block occurs, it means traders are placing orders to sell their stocks or coins.
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| bearish trend. |
Bullish order block.
The bullish order block indicates an upward, impulsive move in the market trend. At this point in the market, traders are buying. What really occurred here is that the last bearish candle is closing up for a bullish candle to form. When you see a bullish order block, the order block is basically forming in an upward direction.
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| bullish trend. |
Consolidation order blocks.
Consolidation order blocks simply mean when the market is moving in a sideways direction; some people have termed it market BOUNCING in sideways form. Here, the market is either moving up or coming down; it's just bouncing at an equal pace.
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| consolidation order block. |
Liquidity order block.
The liquidity order block is simply the expansion candle that occurs to form another market structure. The order blocks always happen when the financial institutions want to liquidate some traders out of the market. When this liquidity happens, it will definitely form another market structure, i.e., give room for another order block structure to be formed.
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| consolidation trends. |
Support and resistance.
Support and resistance are the places that indicate demand and supply in the market; they are also the points traders always mark out for breakout zones before they can place trading orders. The support and resistance zones are strong zones for traders to place their orders.
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| support and Resistance. |
If you want to learn strategic ways to place trades using order blocks as a strategy, comment in the comment section.
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