The ICT Propulsion Block is a concept used within the Inner Circle Trader (ICT) methodology, which helps traders identify institutional market moves, particularly focusing on areas where price is likely to continue trending.
In ICT terms, a Propulsion Block refers to a price zone created by institutional orders that result in rapid market movement, indicating strong momentum in the direction of the trend.
Understanding and identifying Propulsion Blocks enables traders to spot zones where price is likely to react and continue moving in the intended direction.
What is a Propulsion Block in ICT?
A Propulsion Block is essentially a type of order block, but with more emphasis on the aggressive momentum of price action.
These blocks represent areas where institutions or large market participants have entered large buy or sell orders, propelling the price quickly in a particular direction.
They signal a strong trend continuation when price returns to the block, as the unfilled orders left by institutions in these areas tend to cause price to bounce back and follow the initial move.
Unlike regular Order Blocks that show potential reversal zones, Propulsion Blocks indicate areas of high momentum that are more likely to lead to trend continuations.
1. How Does a Propulsion Block Form in ICT?
A Propulsion Block forms during aggressive market moves, often after periods of consolidation or accumulation, when institutions decide to enter large positions.
This creates an explosive move in the price, leaving a strong price imbalance in its wake.
The area from which the sharp move originated becomes the Propulsion Block.
1. Example:
Let’s say the price of EUR/USD has been consolidating around 1.2000 for a few hours. Suddenly, there is a large upward movement, and the price jumps from 1.2000 to 1.2050 in a short period.
The consolidation area around 1.2000 becomes a Propulsion Block because institutions likely initiated large buy orders there, causing the sharp rise in price.
If price returns to this zone, it is expected to continue upward as institutions likely have more unfilled orders in that area.
2. Types of Propulsion Blocks in ICT
1. Bullish Propulsion Block:
This occurs during strong upward moves. It represents a level where price rapidly increased due to large institutional buy orders, leaving behind a support level that is likely to propel price higher when revisited.
2. Bearish Propulsion Block:
This occurs during sharp downward moves.
It signifies an area where price dropped aggressively due to large sell orders from institutions, creating a resistance level that may drive the price lower when revisited.
3. Why Propulsion Blocks Matter in ICT
Propulsion Blocks are important in the ICT methodology because they highlight areas where institutions are actively moving the market.
These levels serve as high-probability zones for traders to place entries, as price is likely to continue its trend when it revisits the block.
By recognizing Propulsion Blocks, traders can anticipate where smart money is likely to be active and align their trades with the momentum created by institutional orders.
This improves the trader’s ability to ride trend continuations or enter trades with lower risk when price retraces to these blocks.
4. How to Trade Using Propulsion Blocks in ICT
Trading Propulsion Blocks involves identifying them on a chart and then waiting for price to revisit the block, which often serves as an entry point for trend continuation trades.
1. Steps to Trade a Propulsion Block
1. Identify the Propulsion Block:
Look for sharp, aggressive price moves that leave behind an order block.
The area before the explosive move (often marked by a consolidation or accumulation zone) is the Propulsion Block.
2. Wait for Price to Retrace:
After the aggressive move, wait for the price to retrace back to the Propulsion Block.
This is where institutions are likely to have unfilled orders.
3. Enter the Trade:
Place your buy or sell orders at the Propulsion Block level, anticipating that price will bounce and continue in the direction of the trend.
4. Set Stop-Loss and Take-Profit Levels:
Your stop-loss should be placed slightly below (for bullish setups) or above (for bearish setups) the Propulsion Block to account for any minor fluctuations.
The take-profit target can be set at a recent swing high or low, or according to your risk-reward ratio.
5. Examples of Propulsion Blocks in Action
Example 1: Bullish Propulsion Block
In a bullish market, imagine the EUR/USD pair has been trading sideways around 1.1000.
Suddenly, there’s a large institutional buy order, and the price spikes to 1.1050.
The Propulsion Block forms around 1.1000, which was the consolidation area prior to the sharp rise.
- As price moves higher to 1.1100, traders look for a retracement.
- The price retraces to 1.1000, testing the Propulsion Block.
- Traders place buy orders around 1.1000, anticipating that the institutional buying pressure will push the price higher again.
- Price then moves upward, continuing the bullish trend.
Example 2: Bearish Propulsion Block
In a bearish scenario, let’s say the GBP/USD pair was consolidating around 1.3200 before a sharp drop to 1.3100 due to large institutional sell orders.
The consolidation area around 1.3200 becomes a Bearish Propulsion Block.
- As price continues to drop, traders wait for a retracement back to the Propulsion Block at 1.3200.
- When price returns to 1.3200, traders place sell orders at that level, expecting institutional selling pressure to push the price lower again.
- Price then resumes its downtrend, dropping below 1.3100.
6. Propulsion Block vs. Order Block in ICT
Although Propulsion Blocks and Order Blocks are similar, they have distinct differences:
- Order Blocks can indicate both reversals and continuations, while Propulsion Blocks are more focused on trend continuations.
- Propulsion Blocks are characterized by more aggressive and momentum-driven moves, while Order Blocks can form during both sharp and moderate price changes.
7. Conclusion
The ICT Propulsion Block is a critical concept for traders who follow the Inner Circle Trader methodology, as it highlights key zones where institutional traders are moving the market.
By understanding and trading Propulsion Blocks, traders can align themselves with institutional order flow, enter high-probability trades, and improve their overall success in the markets.
Incorporating Propulsion Blocks into your trading strategy allows you to ride trends with confidence, knowing that these areas represent zones where institutions are actively participating and likely to continue pushing price in their desired direction.
Leave a Reply