ICT Mentorship Core Content - Month 04 - ICT Rejection BlockJun 30, 2023
Well friends, welcome back, this is teaching 3.3 which deals specifically with
blocks. Well, let me ask you a very quick question. What do you see on this chart with the main highs and lows? Now take a moment and stop the video here. Well, you may have noticed these old highs. being breached and a significant move away from that and we understand this as a turtle soup or a false breakout, it's important to understand that it's probably easy for you to see them in retrospect when I select them on the chart, but you probably don't. You probably don't have much experience seeing them come to fruition beforehand, so in other words, you don't see them forming beforehand and it's because you haven't spent enough time reviewing the charts to see them forming over and over again. and again, obviously you may not have noticed them and I'm pointing them out here, but for some of you who have been working with my
content, you may have seen others, but these two here are the main two, okay . it has two major false breakouts above and high, a nice false swing above a previous high and then a
rejectionand subsequent significant price swing down and we have a false break below a former low and we have a major price rally up, let's take a closer look now that we have an old low here that has been breached, so the cell that stops below that low has been exhausted, so we would expect a revaluation to the upside looking for liquidity On the buy side, the market is trading above a former short-term high here pairing the buys from the previous low with buy stops that can be sold on a move above a previous high each of these is a soup of turtle, the first is a long turtle soup, the second is a turtle soup, a cell down here we have an old charge that is violated where the cell stops are exhausted, we have a wave here where the cell stops are exhausted , we have an old high here where the pi stops were exhausted, so you can see significant price changes by looking at the daily chart like this and it gives you a lot of forecast when you anticipate each time a new high or low forms , we expect some measure of rejection, that is the first set of price anticipation skills you should work on developing because it is the most difficult to prepare in your trading psychology.
Some of you probably understand that the highest miss swing and the lowest swing, several swing or turtle suit, a long and total dream; Some of you probably don't know that there are other patterns of distribution and accumulation that take place in the ups and downs. Let's take a look. Well we are going to see a bear run on buy side liquidity or a turtle soup cell now obviously when you look at this price action here it should be pretty obvious after studying my material we have equal highs that are have exhausted so there are buy stops above those equal highs that have exhausted here we would reasonably expect to see that form a sweep and a possible rejection and trade down and that's what you would see here as an example now some of you You can probably see this. relatively easy on chart formations and how a previous high or low has been breached into a subsequent rejection and pullback of a magnitude longer, but I want to teach you tonight a different approach to looking at distribution and accumulation.
Well, look at this pattern here. Well, we are going to talk about a bearish rejection
blockand before entering it, the ideal configurations are in longer to intermediate term bearish trends and the bearish rejection block is when a price maximum has been formed with long wicks in the maximum or maximums. There may be more than one candle that forms a high of the candle(s) and the price rises above the body of the candle(s) to exhaust the liquidity on the buy side before the price declines, as you can see there are several wicks here forming potential. resistance now, a classic chartist would see this as a potential continuation pattern in the form of a bull flag we talked about earlier in this tutorial.
The falsehoods that accompany some of the classic chart patterns. The price does not move due to animal patterns or assumptions. The geometry in the price action is based on orders, okay, and watch this price action here if it is near a long-term overhead resistance level or if it is trading on a bearish order block or an old load that may not be seen in this sample size of data. but you can see that the prices went up for a good number of candles and then it starts to move towards a small consolidation, but the most important thing is that I want you to look very closely.
Is there a high probability of this going up based on a continuation pattern like a bull flag or pennant or is it showing an underlying distribution. notice that there is no higher high here or there is a notice of the highest body in this formation and the most recent candle that traded through it, the price pushes above the previous highest candle body seen at right. Here, the run above the higher body candle produces the distribution seen on the chart. Here the price does not need to reach a higher high to have a failed swing by looking at the candle bodies, which is one of the first things I taught when I started.
When teaching online how the forex market works, you don't need to have much knowledge about candlesticks except understanding where the open loan closes and whether it follows each high and low swing and plots the open high, low and close, and Try specifically with the opens and closes you will be able to determine what distribution and accumulation takes place at these inflection points, as you can see the real pattern here comes from this previous candle with the higher body and then from the next higher candle. here, before this candle moved up, this candle was the candle with the highest body, we are not paying as much attention to the wick, the wicks highlight the idea that this pattern forms this pattern, here shooting above this previous body or previous close is the highest close or highest open in this swing high this candle moves above it clearing the buy side liquidity and then rejection basically what we are seeing is distribution so what is really see a rejection block and what does it look like?
I have a description of the equipment. here with a single evil candle now this will be better understood when there are multiple candles forming the high and multiple wicks you are still looking for the highest close or high you are still looking for the highest open or close within the The swing high that forms the wicks you are just drawing your attention to a possible rejection block. When you see the wick, you should build the parameters for the rejection block by finding the highest high and the highest open or close at the swing high, it doesn't matter.
If the highest candle is a bearish or bullish closed candle, you are still looking for the highest high with the highest open or close price on the highest wick that frames the rejection block, once we have the rejection block defined by the higher wick high and the higher open or close at the swing high that frames the rejection block and in your mind you should see it as if we have a candle here in itself, this range is going to be a sell block ; In other words, we treat this as a bearish order block when the price rises back to the low of that range which is its trigger.
Now you can do one of two things: If you are aggressive, you can sell at that price and put a significant stop loss above that particular price level or you can wait a bit for the trade to take place and I will leave that up to you. in terms of all the additional knowledge that we will share during the tutorial on entry patterns or you can wait until you trade above that level. and if it moves a significant amount above that higher open or close, in this case it is the higher close or that bullish green candle, if it trades above that particular level and does not trade at a higher high, it could be a seller at a stop below. that level, that way you can sell in case of weakness.
This is one of the few times I use selling with a stop as an entry pattern. How it looks in the graphics. Here is an example. Here we have a candle with a wick. We use the highest one. The reference point of the body is open or closed, in this case it will be the open and the price is trading above it only a little violates, that does not make a new contract high and eventually causes it to be executed for the liquidity of the sell side below the market there. therefore, the rejection block for the bullish side of the market is obviously in ideal scenarios, it is in significant medium-term uptrends and a bullish rejection block is when a price floor has formed with a long wick or wicks that could form over multiple candles and the low or lows of the candle or candles again, it is not limited to a single candle and the price drops below the body of the candle to exhaust the liquidity on the sell side before the price rises again, we frame the rejection order block, in this case the bullish rejection. order block will be the lowest low and lowest open or lowest close which will make that swing low in the time frame you are looking for the pattern once you identify that you have framed the bullish rejection block and we treat this as like a bullish order block when the price goes back down to the high of the block, we can be a buyer just below it or we can wait for the price to trade if it is a little longer time frame, uh, we wait for it to negotiate a little and then we can be buyers.
I want to stop just above that particular level here again. The trigger is that high or the lowest open or the lowest close at that low, but the key is that it has to be a swing. low that has a wick or wicks in the price action this is what it looks like as the price makes a previous low with the wick mark low, it trades just below the bodies of the candle and then we see a strong rejection due to a massive buildup coming It is not always necessary to see a higher high for a failed swing that would be a turtle soup cell or it always requires a lower low for a turtle sheep rejection.
We can anticipate levels like this to take profits if we are short. In this case, if the market had been trading in our favor with another type of setup, we could consider taking profit targets to cover the short just below the lower open or close at the previous low, not always demanding that the price goes up. Below the wicks, the bodies of the candle are really the closest thing to institutional understanding that you're going to get when using retail price delivery mechanisms, like the platforms that we have to trade through from a retail perspective. Hopefully this has been insightful.
We'll have a lot more information as we move forward and start talking about specific entry techniques. We will also review all these things and expand on them, but I want you to review your charts and look for examples of rejection blocks in your subsequent price movements after their formation until next time I wish you good luck and good trading.
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