Order block in ICT/SMC: definition and limitations

An order block (OB) is a concept from ICT/SMC (Inner Circle Trader / Smart Money Concepts). It usually means the last down candle before a strong move up (bullish OB) or the last up candle before a sharp drop (bearish OB). The assumption is that a large participant left unfilled orders in that zone, so price may react to it on a return.

It is an interpretation that cannot be confirmed on the chart, because a chart shows prices, not orders. Definitions differ: some mark the candle's full range, others just the body. Zones get broken through with no reaction, and picking them after the fact makes it easy to fit them to the chart. Treat an order block as one hypothesis about where a reaction may occur, not a sure entry point.