In order to make an order block valid we need a break of structure in the market (read more about this later in the e-book). If there is not break of structure, there is no valid order block. This is the main reason we connected structure to the order blocks, so our system automatically does this for you. So the SMC Indicator will draw the zones for you and take in consider market structure. Cool. So the amount of order blocks and the quality of the order blocks really depends on your settings. In the SMC Indicator we have 2 different types of order blocks.
1 Swing Order Blocks
2 Internal Order Blocks
This simply means that the order blocks are connected to the swing and internal structure. After every BOS in the market, our system will look for highvolume area’s where an order block is located. This means if when you change the swing and internal structure settings, the order blocks willchange with it. It’s important to play around with this and test out whichzones you prefer.
If you would like to see a more detailed blog about order blocks and how to identify them, check out this blog.
The first step in identifying an Order Block in trading involves drawing a rectangle around the area where significant buying or selling activity occurred. This rectangle represents the upper and lower bounds of the Order Block.
What is the recommended way to track Order Blocks on a price chart?" Answer: "To track Order Blocks on a price chart, traders can label them using text or symbols such as 'OB', followed by the date or timeframe of the price action.
Yes, we have our free order block finder which you can find in your Sonarlab Dashboard. This tool plots order blocks for you on auto-pilot and it's top rated on TradingView.
Traders can confirm the validity of an Order Block by waiting for the price to approach it and observing the market's reaction. If the price respects the Order Block and reverses direction, it confirms the Order Block's validity as a significant level on the price chart.