Profitable Liquidity Targeting Strategy

1. Major Structure
we usually wait for price to breach major stucture. While doing so, A FVG must form.

2. Minor Structure
Minor stucture breaks are risky even if price form a FVG while breaking minor structure. But imagine price has been in uptred all day long and it's the mid NY now and the news impacts are almost over, this means price has completed all the bullish delivery and now the brearish delivery may come anytime because bullish strength seems to have diminished. This is when we can give importance to Minor Sturcture Break.

3. Major Structure. Look at the chart. Price broken the minor structure and then retraced creating a new low/new support. We can count this as a new Major Structure. Breaking this new Major structure with Valid OB (must have a FVG) can be a potential candidate to downside move.

What is BOS?
Break of Structure is braking the support even by 1 points/pips. It doesnt mean price has to close below the support to be a valid BOS. But closing below is an added confirmation.

When to Place Order?
This is by far the most important question and requires an understanding over price action. There's no one way to figure this out but once you have mastered price action you will understand candle rejection in a way so you can make precise entry. There are few ways you can do this:
1. Price retrace to either 50% of FVG/ Order Block and then fails to breach them.
2. The Failure to Rejection is often understood by looking at how candle highs are behaving - they will try to go up but each time they reach to thier upper extreme an unseeable forche pushesh them down. the more the number of candles and their extremes get those push the more certain you become. Then comes a rejection candle confirming thiat the buy side deleivery is over is why price couldnt go beyond their extremes. You place your order.
3. During Bank open hours you will see a single candle/2 candle rejection from FVG/Valid OB. Because volume is very high and price will take decisions very fast giving you less time to think.
4. But as for this picture the failure to breach OB was during mid NY open. We had 2 high impact news during NY open, The day had a fair bullish run. With this data you can argue that all the major volume that was pushing price high is over. Price now may slowly but surely correct the day long bullish move to offer fairness. But since the it's now mid NY and not the Bank opens, price may not reject as fast as it would during bank opens. It might take considerable time before price could shift from Buy Side Delivery to Sell Side Delivery.

Note: You need to have idea on overall price movement for the day starting from previous day. Why? Because without this you will fail to time the market. When Bank opens (Euro/London/NY) it may either continue the run by retracing back to recent 15m FVG or can completely shift the market by breaking structure and changing the Side of Delivery. Once you know price is going up and up since yesterday because of the news came in NY bank open yesterday, you will understand the asian session may carry that buy side momentum or can correct to offer fairness. Now when London bank open and the price is corrected, it can carry the momentum developed yesterday or can offer some more correction as the FVG size in 4H chart is huge.

Timing is about understanding the price delivery Side and then using the Bank Open hours to ride them. Bank opens bring in lot of volume is why you will succeed at riding a big move if you are right. In case you are wrong, you know you have a considerably small stop loss. This is where this model comes in, How?
- price id going up up and up with dominant buy side delivery
- bank opens and price shows intent to go down by breaking recent structure with FVG and Valid OB then test those Point of interest(POI) and rejects

This is absolutely amazing and generous of you to spend time to write thus up. I am going to go over this and will come back with some questions. Again thank you! Much much appreciated. Have a good weekend.

No bos but sell placed becz
- asian was bullish
- london bullish
- ny open bullish
- thn news event cane in and took out the top most FVG from left

Entry
- quick bearish fvg
- price correct back to valid OB and reject confirming the bull run is over

tiptop
Do you trade only EURUSD?
Basically you are applying ICT method in your trading

yes only eurusd. And yes applying ict.

In this 4hr chart. Which one would be the OB. Both bear and bull candle are large size. Or would it be the first green candle right after the bearish candle.

is the green strong up wick the bullish OB, followed by the large down candle to clear away any remaining stop losses and fill in the Fair Value Gap

One of the things you mentioned that if we see a runaway OB entry should be considered once a retrace and a rejection occurs around 50% fib or around 62%. Though I do see sometimes happening but not all the time. Once there is a runaway OB price does not retrace and keeps going in one direction.

when you see a runaway OB, Place order. You dont need to wait for price to retrace.. runaway OB means price tried a consolidation but failed as the next candle engulfed the full body of that consolidation candle.
look at this trade today in EURUSD

I would think the bearish order block would be a green or positive candle because price is pushed up to go down.

Order blocks refer to specific price areas where large market participants, such as institutional traders, have previously placed significant buy or sell orders. Clusters of orders are present in these areas, which can have an impact on price movement, liquidity, and market sentiment. In the chart, it looks like a pattern consisting of several candlesticks, where the earlier ones are engulfed by the later ones. Most often, the order block indicates a trend reversal.
This article deals with the term “order block” and how to spot it in the chart and employ in trading.


What is an order block in Forex
Order blocks are supply and demand zones where large market participants place large orders. Since a large volume order can cause a sharp price change, it is divided into smaller order blocks, which are executed as the liquidity of counter orders accumulates. This strategy allows institutional traders, such as central banks and other financial institutions, to fully fill a large order without significantly affecting the price.
In the chart, the order block looks like a range in which the price reverses under the pressure of institutional investors, then returns to the zone, and finally exits it, changing its original direction.

Order block ranges are clearly visible on a zoomed-out scale. The blue and red lines are the support and resistance levels, respectively. At the resistance level, there is an accumulation of liquidity, which is absorbed by the orders of large traders to sell. Under the buying pressure, the price goes up, reaches the level where the orders for the sale of market makers are located and reverses. Candlesticks with such a cluster of orders are marked with red arrows.
It is the same with bullish order blocks. The price is trying to break out the support, but the triggering of buy orders placed at the support level by large traders leads to a price reversal upwards. Then the price again tries to get to the support level (blue arrow), but market makers' buy orders are triggered here.

Types of order blocks
One large order without sufficient counter trade volume can change the structure of the market and lead to a gap. But if it is broken into small and manageable blocks, for example, set in equal volumes every 10 minutes, the market structure will change slowly.
In the M15 timeframe, you will see several candlesticks in a row going up or down. But in the H1 or H4 timeframes, this will be one large candlestick formed by order blocks. Therefore, order blocks are also considered as a pattern.
Order blocks in trading are formed at the extreme points of the trend and at the beginning of the price movement. They can appear in different forms, but their price pattern has a common feature. Order blocks in Forex are:

Bullish order blocks
Bullish order blocks occur in a bear trend, after which the price rises.
A bullish block of orders is defined by the last down (bearish) close candlestick followed by an up (bullish) close candlestick that goes above the previous bearish candle's high. In terms of chart analysis, this is the Engulfing pattern.
In the first case, the bullish engulfing candlestick, which consists of buy blocks, completely overlaps the previous bearish candlestick. In the second case, absorption does not occur immediately. At first, the bearish candlestick tries to return to the support level, but the volume of sell orders is absorbed by a number of blocks of buy orders. Their execution leads to the appearance of two bullish candlesticks. Sellers continue to place orders, and the price rolls back down again. And again, buy orders absorb this volume, and a new uptrend begins.


Bearish order blocks
Bearish order blocks occur in a bullish trend, following which the price turns down.
A bearish order block is a mirror situation. Buyers push the price up, but at a certain level, they meet with the corresponding order blocks of the sellers. Demand is satisfied, and a large shadow appears on the candle with bearish order blocks; the price returns to the opening level. The next part of the order blocks leads to a price move down. But buyers have enough liquidity, so the red candle has a shadow down.
Retail buyers are not yet aware of sell orders against them from an institutional seller. The price reaches a comfortable level to buy, where buyers again face bearish order blocks.

How does order block trading work?
The block order for the price can be interpreted as follows.
1. Support and resistance zones
An order block is an area with a significant number of buy or sell orders. This creates strong support or resistance - a channel within which the price moves.
2. Stop Loss zone

An order block is a zone where traders place stop losses to protect positions from potential losses. When the price reaches this area, many of them can be triggered, leading to a trend reversal.
In shorter timeframes, order blocks look like a consolidation range. This is where a large investor evenly distributes orders that are executed gradually, resulting in a smooth price change. In longer timeframes, an engulfing candle is visible.

How to identify an order block in Forex trading?
The order block Forex appears before a change in the trend direction, that is, a strong movement up or down. The amount of orders of an institutional trader forms an engulfing candlestick that goes beyond the range of order blocks. Then the correction price returns to the range, and the orders of the institutional trader work out again.
How to spot order blocks?
To identify order blocks, follow three simple steps:

1. Spot an Engulfing pattern;
2. Drag a rectangle to the right from the candlestick preceding the engulfing. This will be the range of order blocks;
3. When the price returns to the range and goes beyond it again, open a position in the direction of the new trend.

The form of order blocks may differ. For example, engulfing could take two candles instead of one. Or when the price returns to the range, it can only touch it.

In this example, the green engulfing candle equals the previous red one, but it can be considered a pattern. A rectangle is drawn from the red candle to the right. The price returns to it and touches the support level of the range, but under the pressure of order blocks of a large buyer, it goes up. You can open a position on a candlestick that breaks through the range.

Features of profitable order blocks
There are several criteria to spot order blocks.
Trend
Block orders form in a long-term trend. For example, a large investor watches a depreciating asset for a long time and eventually buys it in parts. The volumes are enough for the price to eventually reverse. But since a large investor enters the market in parts, the market structure shifts slowly, and the trader's orders are executed at the best price.
Trading volumes
The Forex market should be filled with liquidity due to high trading volumes. The market maker should not show off a large volume so that retail traders do not guess about its presence. If a market maker puts 1/10 of the total buy order amount in the market, but there is no liquidity, then there is simply no one to sell the next 1/10 of the order.
The order block will work if there is a constant flow of counter orders. Sellers must be sure that the price will go down, then the market maker will only have to absorb the sell orders put.
Timeframe
Since the split orders of the market maker are placed sequentially, the formation of an order block is visible only in a longer timeframe, where all order volumes are consolidated into the body of one candlestick.
Block orders have much in common with supply or demand zones. In the chart, they look similar: there is a price stop at a strong support or resistance level, its testing, and subsequent pullback. However, their nature is different.

Why order blocks form?
The price is formed due to the balance between buy and sell orders. For example, a large investor wants to buy 1,000 shares. But in the market, the total volume at the current offer price is only 200 shares. If the buyer-investor puts the entire volume in one order, the sellers will see his interest and immediately raise the price. The value of the shares will go up sharply, and the investor will have to buy the remaining 800 securities at a higher price.
The institutional investor is not interested in the price rise, so they do the following:

1. Split an order of 1000 shares into several parts. For example, for 10 orders of 100 shares each.
2. The first order is filled without causing a large price shift because the market offers 200 shares.
3. New sellers are entering the market. The market is dynamic, so new liquidity will gradually accumulate. The investor puts the next order, which is also executed at the best price without increasing the market volatility.

Order blocks in this example are those very small orders for 100 shares. In the chart, they look like a gradual absorption of sellers' liquidity, due to which a consolidation zone is formed.

Order blocks trading strategy examples
The Forex order block trading strategy means one should spot the zone where large investors will set order blocks. The trade is entered when the price goes beyond this supply or demand zone.
Bullish order blocks
Bullish order blocks are formed in a downtrend. At some point, institutional investors decide that the asset has already fallen in price enough, and they can start buying it. So that the asset does not rise in price sharply, they put up a number of smaller orders.
The price reverses, rises for a while, then returns to the range of the bullish order block, where market makers start buying the asset again. A trade is entered when the price moves out of the range of order blocks.
Order block trading strategy

The trade is entered according to the following algorithm:

1. Spot a downtrend;
2. A bullish candlestick appears in a downtrend (1), which absorbs the previous red candle - this is the first sign of the formation of a block order zone;
3. Draw a rectangle to the right from the candlestick (2) - this is the possible order block range;
4. Following candlestick (1), the price moves up a little, but institutional buyers are not willing to buy the asset for the new price. The price returns to the range. This zone contains a cluster of market makers’ orders.
5. The price goes up again under the buying pressure. Again, the large buyers are not willing to buy the asset, rising in price. Section (4) consists of candlesticks with very small bodies. The price returns to the order blocks range again (5);
6. The next breakout of the range up is followed by a candlestick with a large body. The next candlestick (6) is also growing; one can open a position there. Stop loss is just below the candlestick (2).

You should consider a few moments:

1. An order block pattern always means the price should return to the range. But the price should reach the maximum to its middle, or at least, to the level of the previous low. It should not make a new low, as it will indicate that the formed range is a temporary consolidation zone in a downtrend, which is not related to large buyers.
2. The distance between the pivot point and the range return point should be relatively small. Relativity is determined by the timeframe. But if, at this distance, the price changes direction many times, the pattern is considered weak.
3. Not every order block is a signal for a price reversal. But the more times the price returns to the range, the greater the likelihood of a trend reversal. Most often, the price changes direction after one return, but in the example above, you can see that once was not enough.

With a little practice, you will quickly learn to distinguish a consolidation zone followed by a trend continuation from an order block pattern followed by a trend reversal.

Source: Order Blocks in Forex: How to Spot Them | LiteFinance

Hi. So quick question on FVG. DO you draw the rectangle form the 62-78% fibo of the FVG candle or do you include the whole candle as part of the fvg. Also there are many free FVG tools available in trading view. do you know any good ones that i can use?

ICT is adamant to declare that price only rises because banks are selling their previously acquired discount positions at higher prices. price does not move higher unless the banks sell their positions. there is no buying pressure or selling pressure. there is only accumulation and distribution modes. price contracts and only expands. after all the bank positions are sold off, the banks begin to accumulate short positions in premium zones and price only falls when banks are offering their shorts available for sale. this is why price will not go higher, because the banks have accumulated all the short positions. how, if at all, does that impact your order block theory?

The perspective you've shared aligns with the core principles of ICT (Inner Circle Trader) theory, which focuses on institutional market behavior and the concepts of accumulation and distribution. According to this view, price movement is primarily driven by the actions of large financial institutions, such as banks, rather than traditional concepts of buying and selling pressure from retail traders.
Here’s how this understanding might impact the order block theory:

1. Understanding Order Blocks as Institutional Activity Zones: In ICT theory, order blocks are specific price zones where institutional traders (like banks) have placed significant orders. The idea is that these zones represent areas of accumulation (when banks are buying at a discount) and distribution (when banks are selling at a premium). The concept you've described reinforces the importance of identifying these zones. Since price only rises or falls due to the banks' actions (accumulating or distributing), recognizing these order blocks becomes crucial to understanding future price movements.
2. Refinement of Entry and Exit Strategies: Knowing that price moves due to banks selling previously accumulated positions at higher prices or accumulating short positions in premium zones can refine how traders use order blocks. Instead of viewing order blocks as mere support or resistance levels, traders can see them as areas where banks are likely transitioning between accumulation and distribution. This understanding can help refine entry and exit strategies, focusing more on the zones where banks are likely to act.
3. Timing the Market: The concept that price only expands or contracts as banks accumulate or distribute positions implies that timing the market requires understanding the phases of accumulation and distribution. Order blocks, therefore, are not just static zones but dynamic indicators of where the market may change direction based on institutional behavior. This perspective encourages traders to pay close attention to the development of these zones and the market conditions that surround them.
4. Market Psychology and Sentiment: If price movement is predominantly due to institutional actions, then retail traders' conventional notions of buying and selling pressure are less relevant. Instead, order block theory needs to be aligned with the idea that market sentiment and psychology are controlled by these larger players. This means that recognizing when and where institutions are accumulating or distributing can give traders a significant edge.
5. Adapting to Market Changes: As you mentioned, once banks have sold off their positions, they begin to accumulate short positions in premium zones, causing prices to drop when those shorts are sold. This understanding can help traders using order block theory to adapt to changing market conditions more effectively, aligning their strategies with the cyclical nature of institutional accumulation and distribution.

In conclusion, the idea that price only moves based on banks' actions of selling and accumulating positions complements the order block theory by emphasizing the importance of understanding institutional behavior. By integrating this understanding into the use of order blocks, traders can gain a more nuanced view of market dynamics and potentially enhance their trading strategies.