Definition
An order block is a defined price region where significant institutional or large-player buy or sell interest has historically been concentrated, leaving a visible footprint on price action. It represents an area where a cluster of limit or market orders has interacted with available liquidity, often causing a decisive move away from that zone. In both centralized and on-chain markets, order blocks are inferred from how price responds to these zones rather than from a single transaction or isolated order.
As a concept, an order block is closely related to the structure of the order book, since it reflects where substantial resting or executed orders once sat relative to current price. These zones can coincide with high liquidity depth, where substantial volume was absorbed or provided at specific price ranges. Because of this historical concentration of orders, order blocks are often monitored as areas where renewed trading interest and notable price impact may later emerge.
Context and Usage
In advanced market structure analysis, order blocks are used to describe regions associated with prior accumulation or distribution by large participants. They are typically identified after a strong directional move that originates from a compact price range, implying that a substantial imbalance between aggressive and passive orders was resolved there. The concept abstracts away from individual trades and focuses on the collective footprint of sizeable activity.
Within electronic and crypto markets, the behavior of price as it approaches a previously established order block is interpreted in relation to current order book conditions. If liquidity depth has rebuilt around that zone, the area may again absorb or catalyze significant flow, influencing subsequent price impact. While the term is conceptual rather than a standardized metric, it is grounded in observable interactions between concentrated order flow, available liquidity, and resulting price displacement.