EURNZD ____ UNDERSTANDING ORDER BLOCKSHello Trader,
Here we have EURNZD which showed bullish strength last week and rallied into a daily order block. This daily order block is meant to cause a reaction in price i.e a reversal or retracement.
What are order blocks you may ask: Order blocks in forex are price levels where institutions attempt to buy or sell a foreign exchange pair without potentially having too much of an impact on the pair's price.
Once the price enters an order block, It mitigates the orders that were initially placed there and would trigger a bullish or bearish move in price depending on where the price is coming from.
Order blocks found on the daily timeframe (as marked on my chart), weekly and monthly timeframes are usually really strong and can cause a reaction in price.
As you can see, the price created multiple buy-side liquidity just around the order block to induce early sellers, then liquidated their positions. It has gone deeper into the order block and has changed the structure on the 1-hour timeframe from bullish to bearish as expected. From here, I expect the price to retrace not reverse as higher timeframes such as the weekly and monthly suggest higher prices to come.
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Cheers,
David
