When is the Order Block confirmed?

The last red candle within 5 candles before a close above the latest main swing high, with that close at least 1.5 ATR above the red candle's high. Price comes back into the red candle's range within 20 candles; within 3 candles after that, a candle CLOSES above the red candle's high.

When is the Order Block invalid?

Price trades below the order block's low before the entry, or doesn't come back within 20 candles.

Order Block

BullishContinuationIntermediate

The last red candle before a breakout. Price comes back to it, and it holds.

Verdict: CautionBitcoin 4H: 28 trades, won 50%, avg trade +0.6% vs random day +0.2%. Backtest

Swing highSwing high

Order Block: textbook shape, step by step

Price makes a swing high, then pulls back.

step 1/7

Trade rules

Direction	Long (buy)
Entry	The last red candle within 5 candles before a close above the latest main swing high, with that close at least 1.5 ATR above the red candle's high. Price comes back into the red candle's range within 20 candles; within 3 candles after that, a candle CLOSES above the red candle's high.
Cancelled if	Price trades below the order block's low before the entry, or doesn't come back within 20 candles.
Target	Back to the high, projected from the breakout

3 common mistakes

Calling every red candle an order block. Only one followed by a break of a swing high counts.
Buying the first touch of the zone without a close back above it.
Stop inside the block. If price trades under the block's low, it failed.

Backtest

same rules every time · equal size · no fees · method

Market	Trades	Won	Avg trade	Random day
Bitcoin · 4H · 2017-2026	28	50%	+0.63%	+0.21%
US large caps (50) · 1D · 2016-2026	154	49%	+0.12%	+0.67%

Verdict: CautionBeat a random entry in some markets, not in others.

pattern +18%random +5.7%

Bitcoin 4H: pattern +18% vs random day +5.7% over 28 trades

pattern +18%random +103%

US large caps (50) 1D: pattern +18% vs random day +103% over 154 trades

Real examples

Bitcoin · 4H

Breakout Jul 17, 2026, exit Jul 20, 2026 (target)+3.64%

Swing highBlock highBlock lowSwing high64,693 · Jul 10, 2026Last red candle62,517 · Jul 14, 2026Breaks the high64,744 · Jul 14, 2026Back to the block62,710 · Jul 17, 2026Block holds

Bitcoin 4H, real candles from Jul 10, 2026

Boeing · 1D

Breakout Jul 10, 2019, exit Jul 22, 2019 (target)+7.67%

Swing highBlock highBlock lowSwing high361.40 · May 24, 2019Last red candle345.89 · Jun 14, 2019Breaks the high373.96 · Jun 18, 2019Back to the block347.90 · Jul 9, 2019Block holds

Boeing 1D, real candles from May 24, 2019

Bitcoin · 4H

trapBreakout Dec 24, 2019, exit Dec 25, 2019 (stop)−1.59%

Swing highBlock highBlock lowSwing high7,440 · Dec 18, 2019Last red candle7,146 · Dec 22, 2019Breaks the high7,501 · Dec 22, 2019Back to the block7,157 · Dec 24, 2019Block holds

Bitcoin 4H, real candles from Dec 18, 2019