Market Structure
Order Block
In smart-money-concepts vocabulary, the last opposite-direction candle before an impulsive move, treated as a zone where large orders were placed and price may react on return.
An order block (from "smart money concepts", SMC) is the last down-candle before a strong impulsive rally, or the last up-candle before an impulsive drop. The narrative: institutions built positions there, and a return to the zone will find the remainder of those orders, so price is expected to react.
A mechanical definition
Strip the narrative and an order block is a precisely definable zone. For
example: the last opposite-color candle immediately preceding N
consecutive candles whose combined move exceeds k × ATR
(the impulse condition), or a 3-candle engulfing pattern. The zone spans
that candle's body or full range. It is "mitigated" when price returns and
reacts, and invalidated when price closes through it.
Defined this way it becomes backtestable. Functionally it behaves like a single-event support/resistance zone with an impulse-strength filter attached.
What testing shows in general
Impulse-origin zones do get revisited and do produce reactions. So do many other zone definitions, though. The edge, if there is one, lives in the filters (impulse size, freshness, trend context via market structure) rather than in the label. Treat any specific order-block rule as a hypothesis for a backtest, not received wisdom.
On AlphaProve
The filter-is-the-edge point above is what the builtin ob_cvd_divergence
strategy encodes: it pairs the order-block zone with a CVD-divergence
confirmation instead of trading the zone raw. Every candle carries
buy_volume, sell_volume, and delta, so the order-flow read that
separates a defended block from one about to fail sits on the same bar; see
CVD for the mechanics.