An Order Block (OB) is the last bullish or bearish candle before a strong institutional move in the opposite direction. It represents a zone where an institution placed a massive order. When price returns to this zone, the institution fills remaining orders — causing price to reverse again. Order blocks are the most precise entry zones in SMC.

Bullish Order Block

The last bearish (red) candle before a strong upward move. Institutions were accumulating longs within this candle. When price returns to it, institutions add to their long positions — price bounces.

Bullish Order Block OB OB zone Price returns to OB → Buy here ↑

Bearish Order Block

The last bullish (green) candle before a strong downward move. Institutions were distributing shorts within this candle. When price returns to it, institutions add to short positions — price falls again.

How to Identify a Valid Order Block

  • The candle must be followed by a strong impulsive move (at least 3 consecutive candles in the same direction)
  • The impulsive move must break structure (create a BOS)
  • The larger the impulsive move away, the stronger the order block
  • Only the most recent untested OB in the direction of HTF structure is valid

Breaker Block

A Breaker Block forms when an order block fails — price breaks through it instead of bouncing. The failed OB then becomes a zone of interest in the opposite direction.

Example: A bullish OB at ₹23,000 NIFTY fails to hold — price breaks below it. That same zone (₹23,000) now becomes a bearish Breaker Block — when price rallies back to ₹23,000, institutions use it to add short positions.

Mitigation Block

A zone where institutions previously had losing positions and will try to exit at breakeven when price returns. Less powerful than an order block but still creates reliable reactions.

Rejection Block

A candle with a very long wick that shows strong rejection of a price level. The wick body (open to close) acts as the zone — not the full wick range.

NSE Real Use Case

NIFTY 50, daily chart: After a significant downtrend, one large red candle forms at 21,500 before price launches 400 points higher in 2 sessions (a BOS to the upside). This red candle is the Bullish Order Block. Three weeks later, during a pullback, NIFTY returns exactly to the 21,500–21,650 OB zone. SMC traders enter long at 21,550 with stop below 21,490. NIFTY then continues the uptrend for another 600 points.

On NSE, the most reliable order blocks form at the start of major FII buying or selling campaigns. Cross-reference OB zones with daily FII/DII data on Momentum IQ — when an OB zone coincides with a day of heavy FII buying, the probability of a bounce is significantly higher.