Overview
This lecture explains the concept of rejection blocks in trading, how to identify them, and how to use them for high-probability trade entries.
Rejection Block Basics
- A rejection block is identified by a prominent wick with a confirming candle close.
- Bearish rejection blocks require a strong upper wick followed by a bearish candle close.
- Not all wick and close combinations are valid; confirmation is necessary.
Improving Rejection Block Reliability
- Adding criteria increases the probability of a successful rejection block.
- Look for resting liquidity (areas with clustered stop-losses or pending orders) being swept before the rejection block forms.
- A valid rejection block should sweep liquidity and have a bearish or bullish confirmation close.
Confluence and Enhanced Setups
- For higher conviction, look for additional levels above or below the liquidity such as order blocks, imbalances (fair value gaps), key opens, or Fibonacci levels.
- Having both liquidity sweep and a significant level increases the quality of the rejection block.
Entry and Trade Management
- An aggressive entry can be taken as soon as the rejection block wick forms and confirms; stop loss is set just above/below the wick.
- Targets can be set based on low resistance liquidity, internal structure, imbalances, or Fibonacci levels.
- Adapt the targets to personal trading strategy.
Practical Example
- The presenter used a bullish rejection block on a 1-minute chart, confirmed by confluence on 5 and 15-minute charts.
- Entry was triggered after tapping into significant structure and forming a bullish rejection block.
- Stop loss was set below the order block, and the target was the nearest short-term high where reversal could occur.
Key Terms & Definitions
- Rejection Block — A candlestick wick and confirming close indicating potential price reversal at a key level.
- Resting Liquidity — Clusters of unfilled orders or stop-losses that price often sweeps before reversing.
- Order Block — A price range where significant buy/sell orders are placed, often causing reversals.
- Imbalance/Fair Value Gap — A gap or inefficiency between candle wicks where price may return.
- Confluence — The alignment of multiple technical signals to strengthen trade probability.
Action Items / Next Steps
- Practice identifying rejection blocks with liquidity sweeps and confirmation closes on your charts.
- Experiment with adding confluence from order blocks, imbalances, and key levels.
- Review your trades to refine entry and target-setting strategies using this model.