TYPES OF ORDER BLOCKS

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This post is ideal for beginners who are just beginning to explore the basics of Smart Money Concepts (SMC). While we’ve previously covered the concept of an order block, today we’ll shift our focus to exploring other types of blocks in trading.

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註釋

Mitigation Block
A Mitigation Block is a buy or sell zone that forms when the market structure (Break of Structure, or BOS) continues. In simpler terms, it is an order block that has been broken and retested, but from the opposite side.

As we know, when the price moves along a trend, it is more advantageous to open trades in the direction of that trend. The most optimal points for entering buy or sell positions are during price pullbacks. Based on this principle, a mitigation block is formed.

Mitigation Block Sell Scheme

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註釋

Mitigation Block Buy Scheme

For traders who rely on classical technical patterns, it may seem straightforward: a support zone turns into a resistance zone, and a resistance zone transforms into a support zone. However, institutional-level traders understand the strategies and behaviors of classical technical analysis traders. They often manipulate price movements to create and capture additional liquidity.

In this zone lies the block—a standard order block—which transitions into a Mitigation Block after experiencing an impulse breakout.

Schematically, the Mitigation Block for a sell setup appears as follows:

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註釋

Schematically, Mitigation Block in buy looks like this:




✴️ Breaker Block - Smart Money
A Breaker Block is a buy or sell zone formed when the market structure (Break of Structure, or BOS) continues. Essentially, it is a broken order block that has been tested from the opposite side.

The key distinction between a Breaker Block and a broken block lies in the presence of a Change of Character (CHoCH).

As you’ve gathered, the concept of sell zones and blocks in a Breaker Block remains similar to that of a Mitigation Block. However, the process begins with a liquidity grab, followed by a Change of Character (a shift in market structure).

Schematically, a Breaker Block for a sell setup appears as follows:


Breaker Block Buy Scheme

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註釋

✴️ Rejection Block Smart Money
A Rejection Block is a selling or buying zone that appears on the chart as long candlestick tails at a market high or low.
As in all other cases, the block is formed only after liquidity is grabbed from the previous high/minimum or equal highs/minimums. This is classically referred to as a false breakout or sweep.


Bullish and Bearish Rejection Block
The logic of building and searching for a Rejection Block is very simple:

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註釋

Bearish Rejection Block: Swing High, find the highest candle whose high and close are higher than the high and close of the neighbouring candles respectively. The tail (wick) of the candle will be the bearish order block.

Bullish Rejection Block: Swing Low, we find the lowest candle, the minimum and close of which are lower than the minimum and close of the neighbouring candles respectively. The tail (wick) of the candle will be a bullish order block. It does not matter what colour the candle is. At the maximum it can be not only bullish but also bearish, and at the minimum it can be not only bearish but also bullish. This is worth paying attention to. Look for the highest candle, with the highest open or close and with the highest wick (same in the opposite direction).

✴️ Vacuum Block Smart Money
A block stands out as a regular gap - from the high of the first candle to the low of the second candle in an up gap and vice versa, from the low of the first candle to the high of the second candle in a down gap.



We can expect 2 variants of price movement: in continuation, return to the gap zone to fill it partially or completely. This is based on the presence and size of the block order.

Complete gap filling
Complete gap filling of the price void can be expected if there is an order block that is above or below the Vacuum Block. The price can bounce from the beginning of Vacuum Block, but in order to reduce the risk it is better to wait until the block is fully closed and touched.



Partial Filling of the Gap
A partial filling of the price void can occur when the order block is positioned below or above the Vacuum Block but overlaps with it. The price may rebound from the start of the Vacuum Block or completely overlap it. This concept is illustrated schematically in the figure above.

✴️ Conclusion
It’s important to understand that you don’t need to immediately click the "buy" or "sell" button whenever you identify one of the block options. An order block is merely a price range that signals potential buying or selling opportunities, depending on your preliminary analysis and the broader context of price movement.

If you trade indiscriminately from every block, capital loss is inevitable. Remember, price moves to seek liquidity. This is the primary aspect of analysis. Only after identifying the overarching movement should you pinpoint less risky areas (blocks) for entry opportunities.