Order Blocks - Explained in 6 Minutes
Summary
TLDRIn this informative video, Artie from the Moving Average show breaks down the concept of 'order blocks' in trading, focusing on how large investors like Michael Saylor and Elon Musk influence the market with substantial buy or sell orders. He uses Bitcoin as a case study, highlighting how institutional investors' bulk purchases can create significant price movements, evident in large candles and wicks on higher time frames. Artie emphasizes the importance of recognizing these patterns for potential investment opportunities, suggesting that understanding order blocks can lead to profitable trading strategies.
Takeaways
- 📈 Order blocks are large orders of the same security to be bought or sold by institutional or large investors, such as big banks and billionaires.
- 🔍 To spot order blocks, one must look at a higher time frame as institutional traders typically do not trade on minute charts.
- 💼 Institutional investors like Michael Saylor and Elon Musk have significantly influenced the price of Bitcoin through their large investments.
- 📊 Order blocks are characterized by large candlesticks with significant price movements, indicating strong buying or selling pressure.
- 📍 Specific price points, like Michael Saylor's entry price, can act as order blocks where large financial institutions and investors are likely to buy more to protect their investments.
- 📉 When the price of an asset like Bitcoin reaches an order block, it often experiences a rebound as large investors buy to prevent their investments from going negative.
- 📈 Order blocks can also be identified by patterns such as double bottoms, which are seen as indications of strong buying support.
- 📊 Divergences, such as higher price highs with lower RSI highs, can signal potential trend changes and the end of an order block.
- 💡 Order blocks are easier to understand when one knows they represent the collective actions of large financial entities and can be identified by significant price movements on higher time frames.
- 🚀 For long-term Bitcoin investors, setting buy orders at known order block price points can be a strategic move to potentially achieve significant gains.
- 👍 The video encourages viewers to like the content for algorithmic support and the presenter's self-esteem.
Q & A
What is the main topic of the video?
-The main topic of the video is explaining order blocks, how to spot them, and their indications of price movement in the context of day trading.
Why are order blocks significant in trading?
-Order blocks are significant because they represent large orders of the same security to be bought or sold by institutional investors or large investors, which can significantly impact price movements.
What is a recommended source for definitions related to trading?
-Investopedia is recommended as a reliable source for definitions related to trading concepts such as moving averages, the relative strength index, and order blocks.
Why should one look at a higher time frame when analyzing order blocks?
-A higher time frame is recommended because institutional traders typically do not trade on short-term charts like the one-minute chart; they make their moves on longer time frames.
What are some examples of public figures known for their investment in Bitcoin?
-Michael Saylor and Elon Musk are examples of public figures known for their significant investments in Bitcoin.
How did Elon Musk's actions affect Bitcoin's price?
-Elon Musk's actions, such as buying Bitcoin and offering to sell Teslas for Bitcoin, contributed to significant price movements in Bitcoin.
What is the significance of large candles and wicks in the context of order blocks?
-Large candles and wicks indicate strong price movements, which can be a sign of order blocks where large investors are buying or selling in bulk.
What does the term 'order block' refer to in trading?
-In trading, 'order block' refers to a large volume of orders at a specific price point, typically from institutional investors or large investors.
Why do order blocks often lead to price rejections or reversals?
-Order blocks lead to price rejections or reversals because they represent significant buying or selling pressure at specific price points, which can cause the price to bounce off these levels.
How can order blocks be used as a strategy in trading?
-Order blocks can be used as a strategy by identifying areas of strong buying or selling pressure and setting buy or sell orders at these levels, anticipating a continuation of the trend or a reversal.
What is the role of Michael Saylor's investment in Bitcoin in the context of order blocks?
-Michael Saylor's investment in Bitcoin, which is substantial, creates a significant order block. His actions and the price at which he bought can be used as a reference point for potential support levels in the market.
Outlines
📈 Understanding Order Blocks in Trading
This paragraph introduces the concept of order blocks, which are large orders for the same security bought or sold by institutional or large investors. The speaker, Artie, aims to clarify confusion around order blocks by explaining them using basic terminology. He emphasizes the importance of looking at higher time frames to spot these blocks, as institutional traders do not typically trade on minute charts. The paragraph also mentions the involvement of high-profile investors like Michael Saylor and Elon Musk in Bitcoin, highlighting how their bulk purchases can create significant price movements, which are indicative of order blocks. Artie provides examples of order blocks in Bitcoin's price movements and suggests that these blocks can be used to predict future price actions, as large investors are unlikely to let their investments go negative.
🚀 Order Blocks as Indicators for Long-Term Investment
The second paragraph delves deeper into the implications of order blocks for long-term investment strategies, particularly in Bitcoin. It discusses the selling and buying pressures indicated by order blocks and uses Michael Saylor's investment in Bitcoin as a case study. Saylor's substantial holdings and average purchase price are highlighted to argue that significant price drops are unlikely, as it would not be in the interest of such large investors. The paragraph suggests setting buy orders at the identified order block price points for potential gains. It also encourages viewers to learn more about trend line breaking and to engage with the content by liking the video for algorithmic support and the speaker's self-esteem.
Mindmap
Keywords
💡Order Blocks
💡Institutional Traders
💡Bitcoin
💡Michael Saylor
💡Elon Musk
💡Price Movement
💡Time Frame
💡Candles
💡RSI (Relative Strength Index)
💡Divergence
💡Investment Strategy
Highlights
Order blocks are large orders of the same security to be bought or sold by institutional or large investors.
Order blocks are best viewed on higher time frames as institutional traders do not typically trade on minute charts.
Bitcoin is an example of a security where institutional investors are increasingly active.
Michael Saylor and Elon Musk are notable examples of institutional investors in Bitcoin.
Order blocks can be identified by large candles or wicks at specific price points.
When price reaches an order block, there is often a strong reaction, either a bounce or a rejection.
Order blocks can be extended over time, indicating continued interest from large investors.
Divergences, such as higher price highs and lower RSI highs, can signal a potential trend change near an order block.
Double bottoms often indicate the presence of an order block.
Strong rejections off specific points with long wicks or big candles are characteristic of order blocks.
Order blocks represent significant buying or selling pressure from large financial entities.
Understanding order blocks can help in identifying potential support and resistance levels in the market.
Michael Saylor's entry and average coin price for Bitcoin represent a significant order block.
Investors should consider setting buy orders at identified order block price points for potential gains.
Order blocks can provide insights into the behavior of large investors and their impact on market prices.
The concept of order blocks can be applied to other securities beyond just cryptocurrencies like Bitcoin.
For long-term investment strategies, understanding order blocks can be crucial for entry and exit points.
Transcripts
so a lot of you guys are actually really
confused about order blocks so i'm gonna
do my absolute best to explain it in the
most basic terminology possible to show
you where they are how to spot them
and what indications of price movement
show you the locations of these order
blocks did i say order blocks enough
order blocks order blocks
[Music]
welcome back to the channel everybody my
name's artie and this is the moving
average a show where we discuss
everything day trading to keep you
profitable on a consistent basis so i
don't know if you guys have ever done
this but googling things to give you the
definition of things will give you a
better understanding of the things
you're trying to look up so when you go
to investopedia which is like my number
one source to find definitions of moving
averages the relative strength index or
anything day trading related
if you look up blocks or commonly known
as order blocks a block refers to a
large order of the same security to be
bought or sold by institutional or other
large investors so big banks and
billionaires they have areas where they
buy and or sell their orders in blocks
now when looking at order blocks you
must look at a higher time frame because
institutional traders
don't normally scalp the one minute
charts that's just you and sometimes me
so what i'm gonna do is show you bitcoin
because a lot of institutional investors
are getting into bitcoin and there are
certain price points of bitcoin that get
massive movements up so two of the
primary examples that are very public in
big institutional investors into
cryptocurrencies especially bitcoin is
michael saylor
and the world famous elon musk now if we
look at where michael saylor bought into
bitcoin where he purchased
660 bitcoins at that time roughly valued
at about 25 million dollars so since
bitcoin is such a phenomenon and a lot
of these billionaires as well as
financial institutions are investing
into this in bulk not small little
amounts in bulk these are the prices at
which these investors get in for example
michael saylor he purchased a ton of
bitcoin just over a year ago recently he
just bought some more a year ago he had
a discussion with elon musk then elon
musk started buying up bitcoin and
actually started offering to sell teslas
in bitcoin for bitcoin in bitcoin for
bitcoin what i'm trying to get at here
is when these big financial institutions
buy a bunch you will see a big fat
candle you guys know i like to trade my
big ass candles so let's look for them
this right here is the end of 2020
beginning of 2021. these huge wicks and
big candles rejecting off of this same
zone is known as an order block order
block comes up big buy huge little tiny
butt end of this wick big pump big
candles big huge candles then the
previous high at 65 000
before it started cascading down it
broke that trend line if you guys want
to learn about that that is a new order
block for sellers order block for buyers
order block for sellers what did the
price do when it got down to this
previous order block it went up again
why because it is an order block there
are orders living here for big
billionaires and big financial
institutions do you think that they want
their original investment to go negative
no so what do they do when it gets back
down here they buy more pushing the
price up now that previous all-time high
what did it do when it got up there it
hit it rejected broke it tricked people
and pushed back down you could have seen
that here in the humongous divergence
that we had creating higher highs on the
price and lower highs on the rsi again
this is on a daily time frame extending
that original order block out all the
way to here you can see it did not hit
but what you can see forming right here
is another smaller order block double
bottoms are usually a nice indication of
order blocks so you can look at the big
order blocks and you can look also at
smaller order blocks
billionaires
let's just call them millionaires
basically you're looking for very strong
rejections off of specific points with
either long wicks or very big candles
and you can only really truly see these
and distinguish these
on a higher time frame so essentially
these are the order blocks there's a lot
of selling pressure up here there is a
lot of buying pressure down here and for
those of you saying that bitcoin is
going to go down to zero
i don't think michael saylor is going to
let his 125
051 bitcoins purchased for nearly 3.8
billion dollars for an average price of
30 000 per coin go to zero this big fat
order block right here on the bottom is
michael saylor's entry price and average
coin price so god forbid it does come
back down here expect a massive push-up
which in theory would actually get you a
nice hundred percent gain so if i was
you and you want to long-term invest in
bitcoin you got a couple thousand to
invest or whatever don't mortgage your
house please
uh you should set buy orders at that
price point right there order blocks are
very easy to understand when you
understand what they are
large financial institutions and
billionaires buy a bunch big wicks
big candles look at a higher time frame
and look left now if you guys want to
learn about this trend line breaking
thing that i'm discussing right here
check out this video right here and if
you got some value out of this video
make sure you're dropping a like to help
support the algorithm and my self-esteem
thanks so much for watching and we will
see you in the next video
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