What are the specific candlestick patterns or technical indicators, to validate the potential reversal or continuation from the order block zone?
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What are the specific candlestick patterns or technical indicators, to validate the potential reversal or continuation from the order block zone?
When trading around order block zones, you want confirmation before taking a trade. The best way to do this is by using candlestick patterns and technical indicators to validate whether price will reverse or continue from the order block. Here are some key ones:
Candlestick Patterns for Confirmation
Reversal Patterns (Indicating Price Will Reverse from the Order Block)
Bullish/Bearish Engulfing → Strong rejection of the zone, showing buyer/seller dominance.
Pin Bar (Hammer / Shooting Star) → Shows strong rejection with long wicks, confirming potential reversal.
Morning/Evening Star → A three-candle pattern showing a shift in momentum.
Tweezers (Top/Bottom) → Double rejection of the order block, strong reversal signal.
Continuation Patterns (Indicating Price Will Break Through the Order Block and Continue the Trend)
Marubozu Candle → No wick, strong momentum in one direction, confirming a breakout.
Three White Soldiers / Three Black Crows → Series of strong bullish/bearish candles signaling trend continuation.
Inside Bar Breakout → Consolidation followed by breakout from the order block.
Technical Indicators for Extra Confirmation
Volume Profile / Volume Indicator
High volume at the order block → Higher chance of reversal.
Low volume → Possible fakeout or weak reaction.
RSI (Relative Strength Index)
Overbought/Oversold near the order block → Higher probability of reversal.
RSI divergence (Price makes a new high, RSI does not) → Strong reversal signal.
Moving Averages (MA)
Price rejecting a key MA (e.g., 50 EMA, 200 EMA) at the order block strengthens reversal confirmation.
If price breaks above/below the MA with volume, it signals continuation.
Fibonacci Retracement
Order block aligning with key levels (61.8%, 78.6%) increases reversal probability.
Bollinger Bands
Price touching outer band at the order block and reversing → Stronger signal.
How to Use These in Your Trading Strategy
Step 1: Identify the order block zone (previous strong demand/supply area).
Step 2: Wait for price to reach the order block.
Step 3: Look for candlestick patterns that confirm reversal or continuation.
Step 4: Check supporting indicators (RSI, volume, moving averages).
Step 5: Enter the trade based on confirmation with a tight stop loss.