The short answer
An order block is the last opposing candle before a strong, structure-breaking move — a zone SMC traders treat as potential support or resistance when price returns. A fair value gap (FVG), or imbalance, is a three-candle gap left by a fast move that price often revisits. Both have real behavioural logic, and both are largely refinements of classic supply and demand. But both are subjective to identify and fail regularly — they are zones of interest, not guaranteed reversal points.
What an order block is
An order block is, in SMC theory, the last opposing candle (or zone) before a strong move that breaks structure. A bullish order block is the last down-candle before a strong rally; a bearish one is the last up-candle before a strong drop. The idea is that large institutional orders were placed there, so price reacts when it returns.
Honestly framed, an order block is largely a refinement of supply and demand — the useful, observable part is that the origin of a strong move often acts as support or resistance later. The "institutions placed orders here" story is an interpretation on top of that.
What a fair value gap is
A fair value gap (FVG), also called an imbalance, is a three-candle pattern where a strong move leaves a gap that price did not fully trade through — the space between the first candle's wick and the third candle's wick around a large middle candle.
The theory is that markets tend to return to fill these imbalances before continuing, so traders watch FVGs as potential pullback and entry zones — often combined with an order block for confluence.
How to use them
Both are best used as zones of interest in line with the higher-timeframe bias, not as standalone signals. The strongest setups are where an order block, an FVG and a liquidity level line up together — confluence, not a single magic level.
The far edge of the zone gives an objective place for your stop, which is genuinely useful for defining risk.
The honest limits
Here is what the tutorials often skip. Order-block and FVG selection is subjective — which candle, how big a zone — and both fail regularly. Price blows through order blocks all the time, and plenty of FVGs never fill, or not for a long time. "Price fills the gap" is a tendency, not a rule, and it is easy to cherry-pick the ones that worked in hindsight.
So use them as context, define your risk at the zone edge, and never assume a labelled zone must hold. Education, not advice.
Frequently Asked Questions
What is an order block?
The last opposing candle before a strong move that breaks structure. SMC traders treat it as a zone of potential support or resistance when price returns. It is largely a refinement of classic supply and demand.
What is a fair value gap?
A three-candle price gap left by a fast, one-sided move — an imbalance. The theory is that price tends to return to fill it before continuing, so traders watch it as a potential pullback and entry zone.
Do order blocks and FVGs always work?
No. Both are subjective to identify and fail regularly — price blows through order blocks often, and many FVGs never fill. They are zones of interest, not guaranteed reversal points, and are easy to cherry-pick in hindsight.
Are order blocks just support and resistance?
Largely, yes. The useful, testable part is that the origin of a strong move often acts as support or resistance later — which is a supply-and-demand idea. The institutional-order story is an interpretation layered on top.
How do I trade an order block safely?
This is education, not advice. Use it as a zone of interest in line with the higher-timeframe trend, look for confluence with an FVG or liquidity level, and define your risk with a stop beyond the zone. Never assume it must hold.