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Propulsion Blocks Simplified - ICT Concepts

A trading educator explains propulsion blocks in ICT-style analysis, defining them as an order block forming off another order block, and walks through oil and GBP/USD chart examples.

Key Takeaways

  • A propulsion block is an order block that forms off another order block after a retest and close through the originating candle.
  • The mean threshold of a propulsion block is critical; price should not break or close beyond it if the setup is to remain valid.
  • Lower-timeframe entries can be used to refine a higher-timeframe propulsion block, improving risk-to-reward.
  • Liquidity sweeps, inducement, and fair value gaps are used alongside propulsion blocks to confirm directional bias.

What the video covers

  • The video is a follow-up to an earlier lesson on order blocks, and viewers are advised to watch that first.
  • An order block is defined as a single or series of up-closed (bullish) or down-closed (bearish) candles into an important level, validated when price displaces and closes beyond the opening price of that candle series.
  • A propulsion block is described as an order block that forms off another order block, created when a retest of the first order block closes through the candle that formed it.
  • The presenter emphasizes that the mean threshold (midpoint) of a propulsion block is a sensitive level, and a break or close beyond it invalidates the setup.
  • Example 1 uses an oil futures daily chart, where a propulsion block forms after a retest and the trade is taken at the swing low or on a lower timeframe.
  • Example 2 uses a GBP/USD (GU) 60-minute chart, showing an SMT divergence, a fair value gap, and a propulsion block that leads to a displacement toward buy-side liquidity.
  • The presenter discusses inducement, such as previous day highs or swing lows, as a precursor to the propulsion block reaction.
  • Entries are typically taken at the opening price of the block, with the stop placed on the other side of the body or the high, and targets set at liquidity pools.
  • Further examples on oil and GBP/USD demonstrate sell-side liquidity targets and lower-timeframe refinement using hourly charts.
  • The overall method is discretionary price action analysis within ICT (Inner Circle Trader) concepts.

Chapters

  1. 00:00Introduction and Prerequisites
  2. 00:48Review of Order Blocks
  3. 02:30Defining Propulsion Blocks
  4. 02:54Example 1: Oil Futures Daily Chart
  5. 03:33Mean Threshold and Invalidation
  6. 04:12Example 2: GBP/USD 60-Minute Chart
  7. 05:29Lower Timeframe Refinement on Hourly Chart
  8. 06:36Example 3: Oil 60-Minute Chart and Sell-Side Liquidity
  9. 08:16Final Example and Closing Remarks

Answers

Questions about this video

What is a propulsion block according to this video?

A propulsion block is an order block that forms off another order block. It is created when price retests the first order block and closes through the candle that formed it, creating a new zone of interest.

Why is the mean threshold important in propulsion blocks?

The presenter says the mean threshold, or midpoint, of a propulsion block is very sensitive. If price breaks or closes beyond it, the presenter considers the setup invalid and does not look to enter.

How does the presenter suggest entering and managing a propulsion block trade?

The presenter typically enters at the opening price of the block, places the stop on the other side of the body or the high, and targets liquidity such as swing lows or buy-side or sell-side liquidity. A lower timeframe can be used to refine the entry.

Full Transcript — Download SRT & Markdown

00:06
Speaker A
How's it going everyone? This video is going to be over propulsion blocks. Now, if you haven't seen my video on order blocks, I would check that out first, because if you don't understand what order blocks are, this video will not make any sense at all.
00:23
Speaker A
make any sense at all with that being said we will go over a quick review of order blocks in the PDF before we learn about propulsion blocks let's get into it so here we are in the PDF and we will
00:34
Speaker A
With that being said, we will go over a quick review of order blocks in the PDF before we learn about propulsion blocks. Let's get into it.
00:48
Speaker A
validating it as an order block then when retested I'm looking for price to trade away from that order block similarly with a bullish order block we have a series or single down close candle into an important level which
01:01
Speaker A
So here we are in the PDF, and we will do a quick review of what an order block is. An order block is a single or series of up-closed candles into an important level, before price displaces and closes below the opening price of that single or series of up-closed candles, validating it as an order block. Then, when retested, I'm looking for price to trade away from that order block.
01:14
Speaker A
block so for this example here we have a down Clos candle into an important level which is then closed over validating it as an order block then price retraces and reaches into this order block then closing over this down close or series
01:30
Speaker A
Similarly, with a bullish order block, we have a series or single down-close candle into an important level, which then gets displaced and closed over, validating it as an order block. Then, when price retests this area, I want to see it trade away.
01:43
Speaker A
a propulsion block now that you understand what a propulsion block is let's hop into the charts and go over a few examples of them so here we are on oil Futures daily chart for our first example and if you take a look at this
01:55
Speaker A
So what is a propulsion block? A propulsion block is an order block off of another order block. So for this example here, we have a down-close candle into an important level, which is then closed over, validating it as an order block. Then price retraces and reaches into this order block, then closing over this down-close or series of down-close candles into this order block, that then creates a propulsion block.
02:10
Speaker A
candles here so this is going to be an order block now let's see if price retests this area here you can see price retests this area now if we're going to form a propulsion block we're looking for the
02:25
Speaker A
Now, with a propulsion block, I anticipate the opening price to be very sensitive. Zooming in, I do not want to see price break the mean threshold of a propulsion block.
02:41
Speaker A
I'm anticipating this to be very sensitive now what else do I not want to see I don't want to see price come up and break or close over the mean threshold of this propulsion block if I was going to look to take an entry on
02:54
Speaker A
Now that you understand what a propulsion block is, let's hop into the charts and go over a few examples of them.
03:06
Speaker A
is right at this swing low here or I could drop down to a lower time frame but we will show both as you can see here we get tagged in and we actually take profit the same day now let's see if we continue lower
03:23
Speaker A
So here we are on oil futures daily chart for our first example. If you take a look at this price action here, what do you see? Well, if you take a look, we have price reaching into a fair value gap here. We have a series of up-close candles, which then gets displacement, and where do we close below the series of up-close candles here? So this is going to be an order block.
03:33
Speaker A
have some previous days highs lined up here which is great for inducement now here is our propulsion block and ideally we want to see a nice reaction off of this area let's see what happens so far so good now I'm not
03:48
Speaker A
Now let's see if price retests this area here. You can see price retests this area. Now, if we're going to form a propulsion block, we're looking for the order block that forms off of an order block. So this up-close candle here that retests this order block, if we close below the up-close candle here, we form a propulsion block.
04:00
Speaker A
so do we close below it I do not count that as a close below it so I'm not looking for an entry yet here we do close below it now I can look to take an entry here my stop on
04:12
Speaker A
Now that we've gotten that closure, I'm anticipating this to be very sensitive. Now, what else do I not want to see? I don't want to see price come up and break or close over the mean threshold of this propulsion block.
04:25
Speaker A
side liquidity for our next example we're going to be looking at gu on the 60 minut minute chart now if you've seen my last video you know I was using this example and we have an smt here we have
04:36
Speaker A
If I was going to look to take an entry on the daily chart, I could look to enter on the opening price, and I would be comfortable having my stop on the other side of the body or on this high. I personally would use the other side of the body here. I could look for 2R, which is right at this swing low here, or I could drop down to a lower time frame, but we will show both.
04:55
Speaker A
into an important level below an old low into a fair value Gap and break ER block and then displacing out so looking at this down close candle here as our order block let's see what happens next price then respects this order
05:12
Speaker A
As you can see here, we get tagged in, and we actually take profit the same day. Now let's see if we continue lower. We do.
05:27
Speaker A
price and not close below the mean threshold of this propulsion block so you can see we do reach into this propulsion block but we're respecting the mean threshold of it and there we go we get our displacement out so there is another
05:49
Speaker A
Now let's drop into the hourly chart here and see if we can find a lower time frame entry using a daily propulsion block to refine it. So here we are on the hourly chart, and if you notice, we have some previous day's highs lined up here, which is great for inducement. Now, here is our propulsion block, and ideally we want to see a nice reaction off of this area. Let's see what happens. So far, so good.
06:00
Speaker A
the other side of the body and then looking to Target buy side liquidity resting here so something like that so with our next example here you can see we sweep stops right here and then we get displacement lower and what do we
06:15
Speaker A
Now, I'm not trying to catch a top. What I'm looking for is, we have a series of up-close candles here, so if we can close below this, we will form an order block, which I can look to take an entry.
06:33
Speaker A
we close below the opening price of it we do now we have an order block now let's see if price reacts off of this area so we have an up Clos candle into that area are we going to get a closure
06:48
Speaker A
So do we close below it? I do not count that as a close below it, so I'm not looking for an entry yet. Here we do close below it. Now I can look to take an entry here, my stop on this high or above the order block or breaker block. I personally prefer the high, and then looking to target sell-side liquidity or this low.
07:05
Speaker A
opening price we can't reach up into the mean threshold and then we get a continuation lower so for our final example we are on oil Futures 60 Minute chart and if you notice through Asia and London we have
07:19
Speaker A
So let's see how this works out, and there we go, we deliver to sell-side liquidity.
07:35
Speaker A
down Clos candles into a low before displacement and closure over them this forms an order block let's see if this order block supports price higher here you can see we get a down closed candle into an order block into a
07:53
Speaker A
For our next example, we're going to be looking at GU on the 60-minute chart. Now, if you've seen my last video, you know I was using this example. We have an SMT here, we have displacement and a breaker block here, and we also have a low resting right here. So let's see what happens.
08:11
Speaker A
don't want to see closure or a break below the mean threshold if I'm looking to take an entry I'd look to enter on the opening price with my stop either on this low or on the body with a
08:24
Speaker A
Price reaches into the breaker block, sweeping a low. Let's see if we get displacement out. We do. So now we have price reaching into an important level below an old low, into a fair value gap and breaker block, and then displacing out. Looking at this down-close candle here as our order block, let's see what happens next. Price then respects this order block.
08:40
Speaker A
threshold now we're closing back outside this propulsion block and we start to move higher little bit of consolidation and there we go and hit our 2R Target now I hope you found this video helpful if you did please
08:56
Speaker A
Now, if we're going to close over this down-close candle that reacts off the order block, we then form a propulsion block. Do we get a close over it? Yes. Now I want to see price respect the opening price and not close below the mean threshold of this propulsion block. So you can see we do reach into this propulsion block, but we're respecting the mean threshold of it, and there we go, we get our displacement out.
Topics:propulsion blockorder blockICT conceptssmart money conceptsmean thresholdinducementliquidityfair value gapSMT divergenceprice action

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