Learn ICT Rejection Block in 3 Minutes.

Summary

In this video, the speaker explains the concept of rejection blocks in trading, comparing them to order blocks. A rejection block is identified by a wick, often formed after a strong move, which acts as a key level of liquidity. The speaker demonstrates how these rejection blocks show up on different timeframes, highlighting them as areas where price often retests before continuing in its direction. The video also emphasizes how wicks represent gaps in lower timeframes and provides practical advice on using the Fibonacci tool to analyze these gaps for potential market movements.

Takeaways

• 😀 Rejection blocks are a type of market structure, similar to order blocks, but they focus on price rejection at key levels.
• 😀 An order block is a candle that causes a significant market move and is identified when price returns to refill unfilled orders.
• 😀 A rejection block is identified by a wick that shows price rejected a key level, such as a liquidity zone, and price continues in the trend direction.
• 😀 The rejection block can appear as a wick or candle where price rejects a key level (such as a buy stop or sell stop), and price continues to move lower after rejection.
• 😀 Price often revisits the rejection block area before continuing its direction, especially in strong trends, as the wick represents an unfilled gap in the lower time frame.
• 😀 A rejection block can be spotted by observing wicks on higher time frames and translating them into open-high-low-close values in a line chart.
• 😀 Wicks represent gaps on lower time frames, and a rejection block occurs when price rejects a gap formed by the wick at key price levels.
• 😀 When analyzing the yearly chart, rejection blocks can be identified by wicks, and these wicks often represent fair value gaps (FVG).
• 😀 On the monthly chart, the wick acts as a fair value gap where price returns to retest before continuing with a larger move.
• 😀 Tools like Fibonacci (FIP) can help predict that at least 50% of a wick will be filled when price revisits it, as wicks are essentially gaps in lower time frames.

Q & A

What is an order block in trading?

An order block is a candle or area on the chart that causes a significant price move. Price often returns to this level to 'refill' unfilled orders before continuing its trend.

How does a rejection block differ from an order block?

A rejection block is a weaker type of block, usually represented by a wick. It indicates a brief price rejection at a key level, often capturing liquidity before the main trend continues.

What exactly is a rejection block?

A rejection block is essentially a wick on a candle that represents a weak rejection of a key level. It often corresponds to liquidity areas and fair value gaps on lower timeframes.

How can you identify a rejection block on a chart?

Look for candles with large moves that leave prominent wicks. These wicks mark rejection blocks and indicate potential areas where price might retest before continuing.

What is the relationship between a wick and a fair value gap?

On lower timeframes, a wick on a higher timeframe candle appears as a fair value gap. This gap often gets filled when price retests the area.

Why is it useful to translate rejection blocks to lower timeframes?

Translating rejection blocks to lower timeframes helps visualize fair value gaps, making it easier to anticipate where price might retest and continue the trend.

How much of a rejection block's wick should traders expect to be filled?

Traders should generally expect at least 50% of the wick to be filled when price retests a rejection block.

Can you give an example of a rejection block on a yearly chart?

For example, a yearly candle with a long wick indicates a rejection block. On the monthly chart, this wick appears as a fair value gap, where price may later retest before moving in the main trend direction.

What practical tools are recommended for trading rejection blocks?

Traders can use Fair Value Gap (FVG) tools and deviation quadrants to estimate where price will retest and fill part of the wick.

Why are rejection blocks important in trading?

Rejection blocks highlight liquidity areas and potential retest zones, allowing traders to better anticipate price movements and plan entries or exits accordingly.

What is the key takeaway from understanding rejection blocks and wicks?

The main idea is that wicks represent gaps in liquidity on lower timeframes. Recognizing and marking rejection blocks helps traders predict where price might retest before continuing its trend.