Lecture on Propulsion Blocks

Introduction

• Propulsion blocks are an essential concept in trading.
• They are described as "order blocks of order blocks."

Key Concepts

Order Block

• A zone where large amounts of orders are placed.
• Price closes above the order block, then retests and forms another order block.

Propulsion Block

• An order block formed within a prior order block.
• Should not touch the mean threshold, a protected price level.
• Strong price reaction expected when touching a propulsion block.
• It's used as a potential trade entry point.

Mean Threshold

• A protected area in price that should not be traded to.
• Used as a stop loss level for trades based on propulsion blocks.

Example Scenarios

Bullish Example

• Initial Setup:
  • Consecutive down candles form an order block.
  • Price breaks above the order block, then retests it.
  • Another order block is formed, creating a propulsion block.
• Trade Execution:
  • Enter trade at propulsion block. Stop loss at mean threshold.
  • Target: Buy-side liquidity (B-side liquidity).

Bearish Example

• Initial Setup:
  • Price retraces into a previous high with another confirmation for lower prices (CI and O Block).
  • Consecutive up candles form an order block, creating a propulsion block.
  • Price closes below, retests the area, and respects the mean threshold.
• Trade Execution:
  • Enter trade at propulsion block. Stop loss at intermediate term high.
  • Target: Sell-side liquidity (S-side liquidity).

Detailed Trade Execution

• Identify order blocks and propulsion blocks.
• Look for price respecting a block, then forming another block for trade opportunities.
• Use the mean threshold for setting stop losses.
• Use resistance/support areas to set targets for liquidity.

Conclusion

• Propulsion blocks are powerful trade indicators.
• Proper identification and validation are key to successful trading strategies.
• Respecting mean thresholds and liquidity targets is essential.

Summary

• Propulsion blocks provide opportunities with favorable risk/reward ratios.
• Valid setup: price reacts strongly at propulsion blocks without touching mean thresholds.