Order Blocks: The Foundation
An order block is the last opposing candle before a significant directional move. For a bullish order block, it is the last bearish candle before price broke higher. For a bearish order block, it is the last bullish candle before price broke lower.
The premise: institutions place their large buy or sell orders in this candle before the move begins. When price returns to this zone, those same institutions defend their position by adding more orders, causing a reversal.
Identifying a Valid Order Block
- The candle immediately precedes a strong impulse move
- The impulse move creates a break of structure on a higher timeframe
- There is a displacement (fair value gap) visible after the order block candle
- The order block has not been previously traded through
What Is a Breaker Block?
A breaker block is a former order block that has failed. When price trades through an order block and breaks the structure in the opposite direction, that failed order block becomes a breaker block — and it now acts as resistance (if it was a bullish order block) or support (if bearish).
Why Breaker Blocks Work
When institutions fail to hold a level, they need to exit their losing positions and enter new ones in the opposite direction. The breaker block zone represents trapped institutional orders that need to be unwound. When price returns to this zone, those trapped participants are either cutting losses or adding to new positions — which creates strong directional movement.
Order Block vs. Breaker Block: Which Is More Reliable?
Both can produce excellent trades, but they behave differently:
- Order blocks work best on the first or second retest. The third touch is often a sign of weakening institutional interest.
- Breaker blocks tend to produce sharper, more aggressive reactions because they represent both the unwinding of failed positions AND new institutional entries.
In terms of raw reliability, breaker blocks that form on higher timeframes (4H and Daily) after a significant structural break tend to produce the cleanest reversals with the least noise.
Combining Both in Practice
The highest-probability ICT setup combines a breaker block on the 4H chart with an order block on the 1H chart in the same price zone. When both align with a fair value gap and a liquidity sweep, you have confluence that is hard to argue with.
Order blocks tell you where institutions were. Breaker blocks tell you where they are forced to go. The best traders know how to read both.