One Candle Rule Order Blocks
Source Youtube: https://www.youtube.com/watch?v=BX-62SY1lmE&ab_channel=JdubTrades
The core of the video is a scalping strategy centered on "one candle" or "order blocks", designed to exploit rapid price movements right after the market opens. The strategy is described as easy to understand, identify, and repeat, making it accessible for beginners while effective for experienced traders. It relies on candlestick patterns in trending markets, avoiding choppy or sideways conditions.
Order Blocks Defined: These are specific candles that act as support/resistance levels where price is likely to "respect" and continue in the trend direction. The strategy focuses on continuation order blocks (not reversals):
In an uptrend: Look for a down-closed candle (where the close is lower than the open, often red on charts). This candle indicates a temporary pullback but is expected to hold as support for upward continuation.
In a downtrend: Look for an up-closed candle (where the close is higher than the open, often green). This acts as resistance for downward continuation
- Use 1-minute or 5-minute charts during the first hour of trading.
- Mark the order block by drawing a zone from the wick to the body of the candle (not just the body or full wick).
- Probability ranking: Highest probability for candles with small wicks (strong rejection); medium for balanced wicks; lowest for large wicks (weaker).
- Avoid using this in non-trending markets; confirm trends using higher time frames or overall price action.
- Combine order blocks with key levels like previous day's high/low, pre-market high/low, or opening range breakouts.
- Look for alignment with 5-minute or higher time frame levels to stack odds in your favor.
- For uptrends (long trades): Enter at the top or middle of the down-closed candle's zone when price pulls back to it.
- For downtrends (short trades): Enter at the bottom or middle of the up-closed candle's zone.
- Wait for price to "respect" the level (e.g., bounce off support in uptrends).
- Place stops just below the order block in uptrends (to account for minor breaches) or above in downtrends.
- Aim for tight stops to maintain a favorable risk-reward ratio.
- Initial targets: High/low of the day, or continuation beyond key levels.
- Risk-reward: At least 1:2 (e.g., risk $1 to make $2), scaling out partial profits at milestones.
- Use trailing stops or move to break-even once in profit.
- Trade only in clear trends; skip if the market is choppy.
- Focus on the first hour post-open for volatility.
- Combine with other tools like volume or news for better results.
- The strategy is not foolproof; emphasizes risk management and not overtrading.
The video demonstrates the strategy with three live chart examples from popular stocks, showing how price respects the order blocks:
AMD (Uptrend Example): Identifies a down-closed candle in an uptrend on a 1-minute chart. Enters long at the order block with confluence from a 5-minute opening range. Targets the day's high, illustrating quick upward continuation.
TSLA (Downtrend Example): Spots an up-closed candle in a downtrend. Enters short at the block, using pre-market lows as confluence. Price respects resistance and drops, hitting targets efficiently.
NVDA (Combined Example): In an uptrend, uses a down-closed candle aligned with the previous day's high. Enters long, targets high of day plus extension. Highlights how multiple confluences (e.g., higher time frame levels) boost success rates.
