Mitigation Block

The rules

1. Breaker: price sweeps the high first (higher high), then breaks the low.
2. Mitigation: price makes a lower high (failure swing), then breaks the low. No sweep.
3. The block: the last down candle at the broken low (bullish: last up candle at the broken high).
4. The break: a body close beyond the swing low (MSS), ideally with displacement.
5. Quality: lower than a breaker. Trade it only with confluence.
6. Confluence: a fair value gap from the break that overlaps the block.

How to mark it

1. Mark the swing high, the pullback low and the next high.
2. Did the next high take the first one? Yes is a breaker, no is a mitigation.
3. Wait for a body close through the pullback low.
4. Mark the last down candle at that low: that is the block.
5. Only trade it if a fair value gap overlaps the block; short the return.

The 1:3 trade

Entry short at the block's low, where the fair value gap overlaps it. Stop above the block's high. Target the old low below. Reward is exactly three times the risk.

Before you enter

• The second high failed to take the first
• The low broke with a body close
• The block is the last down candle at that low
• A fair value gap overlaps the block
• Stop above the block, target the next low

Common mistakes

• Calling every failed block a breaker
• Trading a mitigation block with no confluence
• Entering before the low has actually broken
• Marking the wrong candle instead of the last down candle at the low
• Holding after a body close back above the block

Key terms

• Mitigation block: failed block after a failure swing, no sweep
• Breaker block: failed block after a liquidity sweep
• Failure swing: a lower high (or higher low) that fails to take the prior extreme
• MSS: a body close beyond the swing that defined the trend
• Fair value gap: the imbalance the break leaves behind
• R:R: reward divided by risk; 1:3 means 3R for 1R risked

Same shape, no sweep. Trade it only with confluence.