ICT REJECTION BLOCK SIMPLIFIED

Summary

This lesson covers rejection blocks in trading, focusing on their identification and significance. A rejection block occurs when price fails to break a certain level after multiple attempts, creating long tail rejections followed by an aggressive move. Key characteristics include equal candle bodies with rejection wicks and a strong price reaction. The video explores both bullish and bearish scenarios, demonstrating how to mark rejection blocks and how smart money often returns to these levels to engage in buying or selling opportunities. Rejection blocks are powerful tools for identifying entry points in price action.

Takeaways

• 😀 Rejection Block: A price level where the market fails to break through after two or more attempts, leaving a long tail of rejection.
• 😀 Key Characteristic: The bodies of the candles are equal, with long rejection wicks at the top or bottom.
• 😀 Price Action: After the rejection block, price moves aggressively away from the level, signaling strong momentum.
• 😀 Market Structure Break: The rejection block is followed by a break in market structure, confirming its significance.
• 😀 Engaging the Market: Traders can enter the market when price returns to the rejection block after breaking market structure.
• 😀 Bullish Rejection Block: A bullish candle followed by a bearish candle with equal bodies and rejection below, followed by an aggressive move upward.
• 😀 Marking the Rejection Block: Mark from the bodies of the candles to the last point of rejection, forming the boundaries of the block.
• 😀 Bearish Rejection Block: A bearish candle followed by a bullish candle with equal bodies and rejection above, followed by a move downward.
• 😀 Smart Money Behavior: Price often returns to the rejection block, where institutional traders may accumulate positions for further moves.
• 😀 Powerful Tool for Traders: Rejection blocks are useful for identifying high-probability trading areas where price may reverse or continue after breaking structure.

Q & A

What is a rejection block in trading?

A rejection block is a price level or area where the market fails to break through on two or more attempts, leaving a long tail of rejection, after which price tends to move aggressively away from that level.

What are the main characteristics of a rejection block?

The main characteristics include: equal candle bodies, long reaction wicks or tails, strong momentum in price after rejection, and often a break in market structure.

How do you mark a rejection block on a chart?

You mark a rejection block from the candle bodies where the rejection begins to the end of the long tail or wick that represents the rejection. The entire space from the body to the end of the wick forms the rejection block zone.

What role does market structure play in identifying a rejection block?

Rejection blocks often occur before or during a break in market structure. The break confirms the strength of the rejection and provides a reference point for potential entries when price returns to the block.

What is the significance of equal candle bodies in a rejection block?

Equal candle bodies indicate balance in buying and selling pressure at that level. This uniformity strengthens the validity of the rejection block as a significant area of price interest.

How can traders use bullish rejection blocks?

Traders can identify bullish rejection blocks when a bearish candle is followed by a bullish candle with equal bodies and rejection below. After price moves aggressively upward, traders can engage in buying opportunities when price returns to the block.

How can traders use bearish rejection blocks?

Bearish rejection blocks form when two candles have equal bodies with long upper wicks and the price moves aggressively downward, breaking market structure. Traders can enter selling positions when price returns to the rejection block zone.

Why are rejection blocks considered strong reference points for smart money?

Rejection blocks represent areas where institutional or smart money accumulates positions. Price often returns to these zones for additional buying or selling, making them reliable points for trading entries.

Do rejection blocks always result in immediate strong price moves?

Not always. While rejection blocks often lead to aggressive moves away from the level, price can sometimes pass other blocks before reaching the rejection block, or return to the block multiple times before moving decisively.

What is the main takeaway from studying rejection blocks?

Rejection blocks are powerful tools for anticipating strong market moves, identifying institutional reference points, and planning strategic entries based on price returning to these zones after breaking market structure.

How should traders practice identifying rejection blocks?

Traders should review historical price data, locate areas where rejection blocks formed, observe how market structure broke, and track how price returned to the blocks before moving aggressively. This helps reinforce recognition and application in live trading.