An ICT Rejection Block refers to a price area where the market strongly rejects further movement in a specific direction, signaling a potential reversal or continuation.
These blocks often form around areas of significant institutional interest, such as liquidity pools, order blocks, or key support and resistance levels.
Rejection blocks are primarily identified by strong wicks on candlesticks, representing areas where price was tested but rejected, leaving behind critical clues for smart money traders.
1. Characteristics of an ICT Rejection Block
1. Strong Wick Rejections:
The candlestick wick is noticeably longer than the body, indicating price rejection.
Example: A bullish rejection block will have a long lower wick, while a bearish rejection block will have a long upper wick.
2. Located Near Key Levels:
Commonly found at order blocks, liquidity pools, fair value gaps (FVGs), or round numbers.
3. Confirmation Through Reactions:
Price reacts sharply and reverses from the rejection block after touching it.
4. Candlestick Patterns:
Often align with pin bars, doji candles, or engulfing patterns.
2. How to Identify an ICT Rejection Block
1. Observe Market Behavior Near Key Levels:
Look for price reaching areas such as liquidity zones, previous highs/lows, or order blocks.
2. Analyze Candlestick Structure:
Identify candlesticks with significant wicks indicating rejection.
For example, a long wick rejecting a resistance level suggests a bearish rejection block.
3. Volume Consideration:
High trading volume during rejection strengthens its validity as a rejection block.
4. Wait for Retest:
Once a rejection block forms, price often retests it, offering a potential trade setup.
3. Types of ICT Rejection Blocks
1. Bullish Rejection Block
- Occurs when price strongly rejects lower levels.
- Found near support zones or order blocks.
Example:
- The EUR/USD pair drops to 1.1000 (a strong support level).
- A 4-hour candlestick forms with a long lower wick, rejecting further downward movement.
- Price rallies after retesting the rejection block, confirming a bullish reversal.
2. Bearish Rejection Block
- Occurs when price strongly rejects higher levels.
- Found near resistance zones or supply areas.
Example:
- GBP/USD rallies to 1.2500 (a significant resistance).
- A 1-hour candlestick forms with a long upper wick, indicating rejection.
- Price drops after retesting the rejection block, confirming a bearish reversal.
4. How to Trade ICT Rejection Blocks
1. Step-by-Step Approach
1. Identify the Block:
- Look for significant wick rejections near institutional levels.
- Example: A rejection block forms at a weekly high, leaving a long wick.
2. Wait for Retest:
Allow price to revisit the rejection block for a high-probability entry.
3. Place Entry and Stop Loss:
- Enter at the rejection block boundary.
- Place a stop loss above the wick for bearish setups or below for bullish setups.
4. Set Target:
Use the next liquidity pool, support/resistance, or fair value gap as your target.
5. Example 1: ICT Bullish Rejection Block
1. Scenario:
- USD/JPY falls to a daily order block at 140.50.
- A 4-hour candlestick forms with a long lower wick at 140.40, showing rejection.
- Price retests the 140.50 level, respecting it as support.
2. Trade Setup:
- Entry: Long at 140.50 (after retest).
- Stop Loss: 140.30 (below the wick).
- Target: 141.20 (previous swing high).
6. Example 2: ICT Bearish Rejection Block
1. Scenario:
- GBP/USD spikes to 1.3150, aligning with a weekly high.
- A 1-hour candlestick forms with a long upper wick at 1.3160, signaling rejection.
- Price revisits the 1.3150 level but fails to break higher.
2. Trade Setup:
- Entry: Short at 1.3150 (after retest).
- Stop Loss: 1.3170 (above the wick).
- Target: 1.3080 (support zone).
7. Tips for Mastering Rejection Blocks in ICT
- Combine with Other ICT Concepts:
- Use alongside order blocks, liquidity sweeps, or fair value gaps to refine entries.
- Be Patient:
- Wait for clear rejection and retest for higher accuracy.
- Avoid Overtrading:
- Focus on high-probability setups near key institutional levels.
- Backtest:
- Analyze historical price action to recognize patterns and improve accuracy.
8. Conclusion
The ICT Rejection Block is a powerful concept for identifying reversal or continuation opportunities in the market.
By focusing on areas of strong price rejection near institutional levels and combining them with other ICT tools, traders can enhance their accuracy and confidence.
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