What it is
Order block is a term from the smart-money school of price-action analysis. It labels the last opposing candle, or small consolidation, immediately before an impulsive move away from an area: the last down candle before a sharp rally is a bullish order block, on the theory that this is where large orders were being accumulated before the move began.
How it works
Most definitions require the move away to be genuinely impulsive, usually described as displacement, and many also require the move to leave an imbalance behind it. The block is drawn as a zone, typically from the open to the low of the candle for a bullish block, and is treated as an area price may revisit. A block that price has already traded fully back through is normally considered used.
How traders use it
In use it is a pullback-entry framework: mark the zone, wait for price to return to it, look for a reaction, and place the stop beyond the far side of the block, which produces a tight and well-defined risk. Combined with liquidity concepts and imbalance it forms a coherent and testable set of rules for entering in the direction of a strong move.
Where it breaks down
The name claims more than the chart can show. Nothing in candle data reveals who traded or what their intent was; an order block is an inference drawn from price alone, and the institutional narrative attached to it is unverifiable. Definitions also vary meaningfully between practitioners, which makes published results hard to reproduce, and in practice the zones overlap heavily with ordinary support, resistance and demand zones under a different name. Use it if your rules are precise enough to test, but do not mistake the story for evidence.
Educational reference. This entry describes how a concept is defined and used. It is not investment advice, not a recommendation, and not a signal. Any rule you build from it should be tested with realistic costs before it is traded, and no historical result guarantees a future one.