PARTIAL · the one that survived
Hypothesis
The last opposing candle before an impulsive move ("order block") marks institutional inventory; price returning to that zone finds support. The most defensible claim in the SMC canon.
Definition
\text{impulse}: \tfrac{C_t - C_{t-3}}{C_{t-3}} \ge 2.5\%, \qquad \text{OB} = \text{last red candle in } [t-10, t-3]
Entry on first return into $[L_{OB}, H_{OB}]$; SL under the block; TP at 2R.
Method
Same universe / friction / split as the whole series. n = 604. Benchmarked against BOTH controls (random 2:1: −0.17%; random-in-uptrend: −0.18%).
Results
| Trades | 604 |
| Win rate | 49% |
| Mean net per trade | +0.83% |
| Profit factor | 1.73 |
| t-statistic | 5.0 |
| Train / test halves | +1.09% / +0.59% — both positive |
Why it works (and what it actually is)
- Formalized, an order block is a pullback-to-origin entry inside a fresh impulse — again the momentum-pullback effect, with the zone anchored at the move's origin where real prior transactions cluster.
- It beats both random controls by a full percentage point per trade with t = 5. This is the only course-sold setup in our audit with a statistically solid, both-halves-positive result.
- No claim about "institutions" is needed or supported — the mechanism is consistent with plain anchoring + momentum.
The one that survived: +0.83%/trade, PF 1.73, positive in both halves, beats random controls decisively. Still a single 84-day window on one venue — and note the irony: the least-marketed, most mechanical SMC component is the only one that tests positive, while the flagship "liquidity sweep" loses to random.
Test the mechanical core of any narrative strategy. Sometimes a real (old, known) effect hides under new branding — and it is never the part the marketing screams about.