We are on the 1-hour gold chart – XAU/USD.
Price is pushing up in this time frame.
As we can see, we have a highlighted box in yellow. It surrounds the most previous bearish candle. It’s not, however, surrounding the entire candle from wick to wick. It is only surrounding the body and bottom wick.
This is known as an order block.
Order blocks are specific zones in price where many orders are happening. The idea is that there is always quite a lot of liquidity in these areas and banks and market makers need prices to retrace back to these zones to pick up more liquidity to push the price further.
Looking to the right, our entry would be the middle of the yellow highlighted zone. The target would be the top of the blue box, and our stop loss would be the bottom of the purple box.
I always like to place my Stop just a few pips underneath the order block and always aim for a target with a minimum Risk to Reward of 1/3
This trade gives us a risk to reward of 1/3.
This means if you risked 1 percent of your account size on this position, you would aim to make 3 percent for your target.
If you don’t feel comfortable aiming for 1/3, you can take profits at 1/2 or 1/2.5.
*NB Not every order block will work as a strategy. One needs to look for multiple things to suggest further confluence that can help with order blocks.
Price is pushing up in this time frame.
As we can see, we have a highlighted box in yellow. It surrounds the most previous bearish candle. It’s not, however, surrounding the entire candle from wick to wick. It is only surrounding the body and bottom wick.
This is known as an order block.
Order blocks are specific zones in price where many orders are happening. The idea is that there is always quite a lot of liquidity in these areas and banks and market makers need prices to retrace back to these zones to pick up more liquidity to push the price further.
Looking to the right, our entry would be the middle of the yellow highlighted zone. The target would be the top of the blue box, and our stop loss would be the bottom of the purple box.
I always like to place my Stop just a few pips underneath the order block and always aim for a target with a minimum Risk to Reward of 1/3
This trade gives us a risk to reward of 1/3.
This means if you risked 1 percent of your account size on this position, you would aim to make 3 percent for your target.
If you don’t feel comfortable aiming for 1/3, you can take profits at 1/2 or 1/2.5.
*NB Not every order block will work as a strategy. One needs to look for multiple things to suggest further confluence that can help with order blocks.
There was strong selling pressure seen by the wicks at resistance.