When do OB occur?

When do OB occur?

• A. They occur after price breaks structure on the daily timeframe only.
• B. Order blocks occur prior to liquidity sweeps and breaks of structure. Analyze the entire move preceding the break of structure to identify the order block accurately. Use lower time frames, such as the 15m chart, to refine your analysis and identify precise entry and exit points. Consider the impact of different trading sessions for optimal timing.
• C. They occur randomly during trading sessions without any specific pattern.
• D. They occur only during earnings announcements.

Answer: (B)

Order blocks are price zones where institutions’ orders absorbed liquidity and set up a directional move. They form before a liquidity sweep and a break of structure, because that is where the market transitions from a range of existing orders to a new leg driven by those large participants. To identify an order block, focus on the entire move that leads into the break of structure: look for the last swing or consolidation that precedes the breakout and define the price area that contained the orders fueling that move. Analyzing that preceding move helps reveal the footprint of supply or demand that created the block. Using lower timeframes, like a 15-minute chart, lets you pin down the exact bars or cluster of bars that compose the order block and sharpen entry and exit points. Also, be mindful of trading sessions, since different sessions bring varying volumes and order flow, which can affect how the block holds and how clean the breakout looks.

Order blocks are price zones where institutions’ orders absorbed liquidity and set up a directional move. They form before a liquidity sweep and a break of structure, because that is where the market transitions from a range of existing orders to a new leg driven by those large participants. To identify an order block, focus on the entire move that leads into the break of structure: look for the last swing or consolidation that precedes the breakout and define the price area that contained the orders fueling that move. Analyzing that preceding move helps reveal the footprint of supply or demand that created the block. Using lower timeframes, like a 15-minute chart, lets you pin down the exact bars or cluster of bars that compose the order block and sharpen entry and exit points. Also, be mindful of trading sessions, since different sessions bring varying volumes and order flow, which can affect how the block holds and how clean the breakout looks.