Order blocks and mitigation
An order block is the last opposing candle before displacement. It is a candidate zone, and its credibility depends on what came with it.
Interpretive framework. Smart Money Concepts is a discretionary way of labelling price action. Definitions vary among practitioners, and nothing here proves institutional orders or a guaranteed edge. All examples use synthetic numbers.
Operational definition
Bullish order block (OB): the last down-close candle before a bullish displacement that breaks structure. The zone is usually drawn from that candle's low to its high (some use open to low). Bearish OB is the mirror image.
The name implies large orders were placed there. That is an interpretation. What you can verify is simpler: a specific candle preceded a strong move.
Filtering candidates
Because almost every move has a 'last opposite candle', unfiltered OBs are everywhere. Common filters: the move from the OB caused a BOS or CHoCH; it left an FVG; it followed a liquidity sweep; the OB is unmitigated (price has not yet returned to it).
Mitigation means price returning into the zone. First touch is often considered most relevant. A candle closing through the far side of the OB invalidates it — some practitioners then relabel it a 'breaker' with opposite polarity.
Worked example
Scoring an order block candidate (synthetic)
- After sweeping lows at 42.6, the last down candle is O 44.4, H 44.6, L 43.5, C 43.8.
- The next three candles rally to 50.3 and close above the last lower high at 49.0 (CHoCH), leaving an FVG.
- Candidate bullish OB: 43.5-44.6. Filters met: sweep ✓, displacement ✓, structure break ✓, FVG ✓, unmitigated ✓.
- Invalidation: a candle closing below 43.5 means the zone failed.
A candidate with more confluence is a better-defined hypothesis — still not a guaranteed reaction.
Common misconceptions
“Order blocks show where banks placed orders.”
Chart data contains no order-origin information. The label is a narrative applied to a candle.
“The more OBs you mark, the better.”
Marking every opposing candle makes the concept unfalsifiable. Use strict filters.
Checkpoint