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ICT Mentorship Core Content - Month 04 - ICT Rejection Block
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ICT Mentorship Core Content - Month 04 - ICT Rejection Block

Dealing with Rejection Blocks

This section discusses rejection blocks and their significance in trading.

Understanding False Breakouts

  • False breakouts occur when old highs or lows are violated, followed by a significant movement away from them. These can be identified as turtle soup or false breakout patterns.
  • Recognizing false breakouts requires experience and familiarity with chart formations.
  • False breakouts can provide valuable insights into market movements and help anticipate future price rejections.

Anticipating Price Rejections

  • Developing the skill of anticipating price rejections is crucial in trade psychology.
  • Higher high failure swings, lower low failure swings, and turtle soup patterns are examples of anticipatory price rejection signals.
  • Other distribution and accumulation patterns may also occur at highs and lows.

Bearish Rejection Blocks

This section focuses on bearish rejection blocks as a potential continuation pattern in downtrends.

Identifying Bearish Rejection Blocks

  • Bearish rejection blocks occur when price reaches above the body of candles forming potential resistance levels before declining.
  • Strong wicks on the high or highs indicate buy stops being run out before a price decline.
  • Analyzing candle bodies rather than relying on classical chart patterns helps identify underlying distribution.

Distribution vs. Continuation Patterns

  • In bearish rejection blocks, there may not be a higher high formed. Instead, focus on the bodies of candles to determine distribution signals.
  • Understanding open, high, low, close (OHLC) values and tracking swing highs and lows can aid in identifying distribution and accumulation patterns.

The transcript provided does not contain enough information to create additional sections.

New Section

The speaker discusses the concept of pattern formation and rejection blocks in trading.

Highlighting Pattern Formation

  • The speaker explains that a pattern is formed when the price shoots above the previous body or close, creating a swing high.
  • This candle clears out the buy side liquidity and indicates rejection.

Understanding Rejection Blocks

  • The speaker states that what we are witnessing is distribution.
  • A rejection block is depicted as a single wicked candle, but it can also be formed by multiple candles with high wicks.
  • The highest open or close within the swing high defines the rejection block.

Building Parameters for Rejection Blocks

  • When observing a wick, one must identify the highest high and highest open or close within the swing high to define the rejection block.
  • It doesn't matter if the highest candle is bullish or bearish; what matters is finding the highest high with its corresponding open or closing price.

Selling on Weakness

  • The range of a rejection block becomes a selling block.
  • Traders can sell at the low of that range and place a stop loss above it for an aggressive approach.
  • Alternatively, they can wait for price to trade above that level before selling on weakness.

Bullish Rejection Blocks

  • In an ideal scenario during major uptrends, a bullish rejection block forms when price reaches below the body of a candlestick to run sell-side liquidity out before rallying higher again.
  • The lowest wick low and lowest open or close define this bullish rejection order block.

Buying Opportunities

  • When price trades back into the high of a bullish rejection block, traders can become buyers just below it or wait for price to trade through it before buying.
  • The trigger is the highest open or close in the swing low, and a wick or wicks must be present.

Take Profit Objectives

  • Traders can anticipate taking profits at levels just below the lowest open or close in the previous swing low.
  • It is not always necessary for price to go below the wicks; focusing on the bodies of the candles provides a better understanding.

These are some key points discussed in the transcript regarding pattern formation and rejection blocks in trading.

Playlists: 2016 ICT Private Mentorship Core Content Month 04
Video description

2016 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in December 2016. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.