Have you ever found your trades frequently diverging from your expectations?

If so, it’s time to consider order blocks, a critical but commonly overlooked topic in the Smart Money Concept (SMC).

Order blocks are a strategy for identifying valid and high-quality entries, often used by all the good traders.

However, confirming valid order blocks can be challenging, leading traders astray and increasing losses.

For that reason, we will explore a strategy that combines pivot indicators (TradeDots Indicator) with order blocks, aiming to enhance trading outcomes with minimal effort.

Order Blocks Explained

Order blocks are strategic market areas that indicate the final bearish or bullish activity before a significant price shift. These blocks serve as potential reversal zones which traders can capitalize on.

A valid bearish order block signifies the last bullish candle before a significant downward price movement.

In contrast, a bullish order block represents the last bearish candle preceding a considerable upward price shift.

Identifying valid order blocks must adhere to specific rules:

1. Liquidity Sweep:

The price must be taken out and sweep the liquidity of the previous candle.

2. Imbalance Creation:

The price should leave behind an insufficiency near the order block area.

3. One-time Use:

Once utilized, an order block is retired. If it’s mitigated, it is no longer of interest.

4. Break of Structure:

A noteworthy order block should lead to a significant market structure change, such as a shift of structure or change of character.

The Role of Pivot Point Indicators — TradeDots Indicator

Pivot points assist in discerning the overarching market trend by marking major swing highs and swing lows to pinpoint market reversals.

One such tool is the TradeDots Indicator, which swiftly confirms reversals in almost real-time, offering traders superior advantage in the market compared to other indicators requiring an average of 10 bars.

The capabilities of the TradeDots Indicator comprise:

1. Identifying Support and Resistance Levels:

Pivot Points highlight potential support and resistance levels, which are automatically labeled by the indicator.

2. Predicting Trend Reversals:

These tools excel in projecting potential shifts in price trends, with every alert on the chart indicating a potential market reversal pattern.

3. Proactivity:

Contrasting other indicators that react to price movements, TradeDots offers proactive, advanced data calculated from previous price action data and chart patterns.

Combining Order Blocks with TradeDots Indicators

When utilizing the TradeDots Indicator, identifying valid order blocks becomes effortless. Here are the steps:

1. Spot the Pivot:

Use the TradeDots Indicator to mark the pivots, which can function as potential support or resistance levels and reversal points.

2. Identify Your Order Block:

Locate a valid bullish or bearish order block. Any candlestick labeled by TradeDots that creates an insufficient afterward is considered a valid order block.

3. Anticipate a Price Reversal:

Traders may enter early right when the Fair Value Gap is formed. However, traders could also wait for the price to approach the order block for another time, for a possible reversal.

4. Enter the Trade:

Once the TradeDots Indicator confirms the reversal within the order block range, this acts as your trading signal. Trade entry can be at the body or wick of the order block, or you may adjust your entry depending on the price action around the order block.

Final Words

The integration of order blocks with TradeDots Indicators can provide traders with enhanced market insights and more profitable trading decisions.

Despite their knack for predicting trend reversals, it’s imperative always to supplement with other technical and fundamental analyses to form a comprehensive trading strategy.

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About TradeDots

TradeDots is a TradingView indicator that identifies market reversal patterns through the implementation of quantitative trading algorithm on price actions. Try our 7-day FREE Trial to level up your trading game.

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Disclaimer: The information provided in this article is for educational purposes only and should not be considered as financial advice. Trading involves risk, and it is important to conduct thorough research and seek professional guidance before making any investment decisions. Prospective investors are encouraged to perform their own due diligence or consult a financial advisor before making investment decisions.

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