Rejection Block

The rules

1. Location: a clear swing high (bearish) or swing low (bullish), not the middle of a range.
2. The wicks: at least two long wicks, clearly longer than an average candle.
3. The bodies: they close back away from the extreme. Only the wicks got through.
4. The zone: highest body to highest wick (bullish: lowest body to lowest wick).
5. The trade: wait for price to leave, then come back into the wicks.
6. Invalidation: a body close above the highest wick. The sellers are gone.

How to mark it

1. Find the swing high where several candles left long upper wicks.
2. Mark the highest body, open or close: that is the bottom of the block.
3. Mark the highest wick: that is the top of the block.
4. Let price move away first. No trade while it is still at the high.
5. Sell when price trades back into the wicks; stop above the highest wick.

The 1:3 trade

Entry short where price trades back into the wicks, at the highest body. Stop just above the highest wick. Target the low the first drop left. Reward is exactly three times the risk.

Before you enter

• Stacked long wicks at a real swing high
• Zone marked from the highest body to the highest wick
• Price left the high before coming back
• Entry inside the wick zone, not above it
• Stop above the highest wick, target a real low

Common mistakes

• Calling one random wick a rejection block
• Marking the zone from the candle lows instead of the bodies
• Selling while price is still grinding at the high
• Placing the stop inside the wicks
• Holding after a body close above the highest wick

Key terms

• Fair value gap: 3-candle imbalance between candle 1 and candle 3 wicks
• CE: consequent encroachment, the 50% of a fair value gap
• Order block: last opposite candle before displacement
• Mean threshold: 50% of the order block's body
• Breaker: failed order block after a sweep and a break of structure
• Mitigation block: same idea as a breaker, but with no sweep first
• IFVG: a gap price closed through, now trading as the opposite side
• BPR: where a bullish and a bearish fair value gap overlap
• Rejection block: long wicks at a swing point, body to wick extreme
• R:R: reward divided by risk; 1:3 means 3R for 1R risked

Wicks are rejected price. Mark them, wait for the test.