Smart money: order blocks, FVG, liquidity

A trader in Mumbai watches USD/INR fall to 83.2000, then rally. She marks the last down candle before the rally as a demand block. The chart shows only prices and times. The block is her guess that a large buyer placed orders there. That guess is the whole idea.

An order block is a price area where large orders are assumed to sit. A fair value gap is a price area where trading was so fast that one side of the book was thin. Both are stories about other people's orders. The chart cannot show those orders. It shows only the prices they left behind.

The same logic applies to liquidity. Liquidity means resting orders, often stops, clustered above a high or below a low. A sweep is a move through that cluster. The move may have triggered those orders. It may not. The term describes a possibility, not a fact.

Suppose price rises to 83.3000, then falls back to 83.2100. Many traders call that a sweep of stops above 83.3000. The fall is real. The cause is not visible. Price could have fallen because large sellers arrived, because news changed, or for no clear reason at all.

A sweep is not a signal. It is a move that may have taken stops. If you treat every sweep as a signal, you will act on a guess. If you treat it as one piece of information, you can wait for price to confirm or reject the level.

The gap between 83.3000 and 83.2100 is 15 pips. On 0.10 lots of USD/INR, one pip is ₹1, so the move is worth ₹15. That number is arithmetic. It does not depend on whether the sweep was real. Write it down before the move happens, then watch.

A reader writes that the demand block at 83.2000 to 83.2100 must hold. That is an assumption. The block is a place where large orders are assumed to sit. Nothing in the chart makes it hold. SEBI does not license any method that guarantees it.

If price passes through the block, the level has failed. That failure is information. It tells you the assumed orders were not there, or were smaller than the selling. It does not tell you the method is broken. It tells you the guess was wrong this time.

Keep the two ideas separate. The block is a hypothesis. The pip distance and the rupee value are measurements. A hypothesis can be wrong. A measurement is either correct or incorrect. Mixing them is how a chart story becomes a belief.

Suppose price sweeps 83.3000 and then returns to a block at 83.2100. The distance between those two prices is 90 pips. On 0.10 lots, where one pip is ₹1, that round trip is worth ₹90 before any costs.

Now suppose the sweep reaches 83.3050 instead. The distance to the same block is 95 pips, so the same 0.10 lots gives ₹95. The level has not changed. Only the sweep price moved, and the rupee figure moved with it.

This is why the pip distance and the lot size are written down together. A block at 83.2100 means one thing on 0.10 lots and ten times that on 1.00 lot. The chart looks identical in both cases.

Your broker may quote a slightly different sweep price, widen the spread near 83.3000, or charge a commission on top. Those costs vary between brokers and are not part of the raw pip value.

Write the level, the pip distance and the rupee value in a notebook before the move. The number is then a fact you chose, not a figure you calculate afterwards to fit the outcome.