30-ICT Mentorship Core Content - Month 4 - ICT Rejection Block

Last modified by Drunk Monkey on 2022-09-09 12:30
1 00:00:33,150 --> 00:00:49,350 ICT: Okay, folks, welcome back. This is teaching 3.3 dealing specifically with rejection blocks. Clearly answer your question real quick. What do you see in
2 00:00:49,350 --> 00:00:56,040 this chart at major highs and lows. Take a moment, pause the video here
3 00:01:02,820 --> 00:01:19,020 okay. You may have noticed these old highs being violated and a significant movement away from that. And we understand this as a turtle soup or a false
4 00:01:19,020 --> 00:01:26,850 breakout, it's important to understand that it's probably easy for you to see these in hindsight when I pick them out on the chart. But you probably don't
5 00:01:26,850 --> 00:01:38,790 always you probably don't have that much experience seeing them come to fruition beforehand. similar words you don't see them forming in advance. And it's
6 00:01:38,820 --> 00:01:46,740 because you haven't spent enough time going through the charts, seeing how they form over and over and over again. Now obviously, you may not have noticed these
7 00:01:46,770 --> 00:02:00,240 pointing them out to you here. But for some of you that have been working with my content, maybe you've seen other ones. But these two here are the two majors.
8 00:02:01,110 --> 00:02:11,100 Because you have two major false breaks above an old high a nice fall swing above a previous high and then a rejection and a subsequent and significant
9 00:02:11,100 --> 00:02:21,180 price swing lower. And we have a false break below an old low and we have a nice significant price rally higher. But let's take a closer look down. We have a old
10 00:02:21,180 --> 00:02:31,590 low here that's been violated. So the cell sales below that low has been ran out. So we would expect repricing on the upside looking for buy side liquidity.
11 00:02:34,530 --> 00:02:45,150 market trades above and old short term high here, pairing up the buys from the previous low with buy stops they can sell to with a movement above the previous
12 00:02:45,150 --> 00:02:58,860 high. Each one of these is a turtle soup, the first being a turtle soup long. The second being a turtle soup a sell. Down here we have an old load that's
13 00:02:58,860 --> 00:03:17,940 violated where sell stops have been ran out. We have all over here where cell stops had been ran out of old high here where I stopped it and ran out. So you
14 00:03:17,940 --> 00:03:27,210 can see significant price swings at looking at the daily chart like this. And it gives you a great deal of prognostication. When you anticipate every time a new
15 00:03:27,210 --> 00:03:36,300 high or low is formed, we expect some measure of rejection. That's the first anticipatory price skill set that you should be working towards developing
16 00:03:36,300 --> 00:03:46,980 because it's the hardest one to groom in your trade psychology. Some of you probably understand that higher high failure swing and lower low various swing,
17 00:03:47,520 --> 00:03:59,040 or Chelsea long and tersely by some of you probably aren't aware that there are other distribution and accumulation patterns that take place at highs and lows.
18 00:04:00,090 --> 00:04:01,080 So take a look at that now.
19 00:04:06,480 --> 00:04:18,480 Okay, we're gonna look at a bearish run on buyside liquidity, or a turtle soup sell. Now obviously, when you look at this price action here, it should be
20 00:04:18,480 --> 00:04:27,450 pretty obvious after studying my material, we have equal highs that's been ran out. So there's my stops above those equal highs and there have been ran out
21 00:04:27,450 --> 00:04:38,910 here, we would reasonably expect to see what form a sweep through and a potential rejection and trade lower. And that's what you would see here as an
22 00:04:38,910 --> 00:04:50,100 example. Now, some of you probably can see this relatively easy, and the chart formations and how a previous high or previous law has been violated and then a
23 00:04:50,100 --> 00:05:00,570 subsequent rejection and a retracement of a longer magnitude. But I want to teach you tonight, a different approach to looking at that distribution and
24 00:05:00,570 --> 00:05:15,810 accumulation. Okay, look at this pattern here. Okay, we're talking about a bearish rejection block. And before we get into it, the ideal setups are found
25 00:05:15,810 --> 00:05:26,160 in major to intermediate term down trends. And the bearish rejection block is when a price high has formed. With long wicks on the high or highs, it can be
26 00:05:26,160 --> 00:05:37,800 more than one candle that forms the high of the candle stick or sticks. And price reaches up above the body of the candle or candles to run the buy side
27 00:05:37,800 --> 00:05:51,900 liquidity out before the price declines. Now you can see there are several wicks here forming potential resistance. Now a classic Chartist would look at this as
28 00:05:51,900 --> 00:06:01,080 a potential continuation pattern in the form of a bull flag. We taught earlier in this mentorship, the falsehoods that come along with some of the classical
29 00:06:01,320 --> 00:06:12,180 chart patterns, price does not move around because of animal patterns, or suppose geometry and price action. It's based on the orders. Okay, and looking
30 00:06:12,180 --> 00:06:22,410 at this price action here. If this is near a overall longer term resistance level or trading into a bearish order block, or an old low that may not be seen
31 00:06:22,410 --> 00:06:34,080 in this sample size of data. But if you see prices ran up higher for a good number of candles, then it starts moving into a small consolidation. But more
32 00:06:34,080 --> 00:06:43,620 importantly, I want you to look real close. Is there a strong likelihood that this is going to go higher based on a continuation pattern of like a bull flag
33 00:06:43,650 --> 00:07:07,320 or pennant? Or is it showing underlying distribution. Notice there's no higher high here or is there take notice of the highest body in this formation and the
34 00:07:07,320 --> 00:07:25,890 most recent candle that traded through it. Price pushes above the previous highest candles body. Seen right here that run above the highest bodies candle
35 00:07:27,450 --> 00:07:39,450 produces the distribution seen in the chart here. Price does not need to make a higher high to have a failure swing by looking at the bodies of the candle,
36 00:07:39,630 --> 00:07:49,320 which is one of the first things I taught when I started teaching online how the foreign exchange market operates. You don't need to have a great deal
37 00:07:49,320 --> 00:07:58,980 understanding about candlesticks except for understanding where the open high low and closes. And if you follow every swing high and low, and you chart the
38 00:07:58,980 --> 00:08:06,810 open high, low and close and you deal specifically with opens and closes, you'll be able to ferret out what distribution and accumulation takes place at these
39 00:08:06,810 --> 00:08:20,160 turning points. As you can see, the real pattern here is from this previous highest body candle. Then the subsequent later, higher drive higher this candle
40 00:08:20,160 --> 00:08:29,940 here prior to this candle moving up. This candle was the highest body candle we're not paying too much attention to the wick. The wicks highlight the idea of
41 00:08:29,940 --> 00:08:41,160 this pattern forming this pattern here shooting above this previous body or previous close is the highest close or highest open in this swing high this
42 00:08:41,160 --> 00:09:00,390 candle here drives above it clearing out the buy side liquidity and then rejection basically, what we're seeing is distribution. So what is it really to
43 00:09:00,390 --> 00:09:02,640 see a rejection block and what does it look like?
44 00:09:04,050 --> 00:09:17,190 I have a crude depiction here with a single wick candle. Now this is going to be better understood. When there is multiple candles that form the high in multiple
45 00:09:17,190 --> 00:09:30,480 wicks. You're still looking at the highest close or high. You still looking for the highest open or close inside the swing high that forms the wicks are just
46 00:09:30,480 --> 00:09:41,100 drawing your attention to a potential rejection block. When you see the wick you have to build the parameters for the rejection block by finding the highest high
47 00:09:41,820 --> 00:09:54,030 and the highest open or close in the swing high. It does not matter if the highest candle is a bearish or bullish closed candle. You're still looking for
48 00:09:54,030 --> 00:10:08,340 the highest high with the highest open or closing price in To the highest wick that frames the rejection block. So once we have the rejection block defined by
49 00:10:08,340 --> 00:10:22,530 the highest wicks high and the highest open or close in the swing high that frames the rejection block. And in your mind, you should be viewing it like we
50 00:10:22,530 --> 00:10:39,960 have here, take candle all in of itself. This range is going to be a selling block. In other words, we treat this as a bearish order block. When price trades
51 00:10:39,960 --> 00:10:50,850 back up to the low of that range, that is your trigger. Now, you can do one of two things. One, if you're aggressive, you can sell at that price, and put a
52 00:10:50,850 --> 00:11:02,280 significant stop loss above that particular price level. Or you can wait for to trade through it a little bit. And I'll leave that up to you in terms of all the
53 00:11:02,280 --> 00:11:11,760 additional insights that we'll be sharing over the mentorship about entry patterns. Or you can wait for it to trade above that level. And if it moves to
54 00:11:11,760 --> 00:11:22,980 nificant amount above that highest open or closed in this case is the highest close or that bullish green candle. If it trades above that particular level,
55 00:11:23,010 --> 00:11:36,150 and it does not trade to a higher wick high. You could be a seller on a stop below that level. To that we're going to be selling on weakness. This is one of
56 00:11:36,150 --> 00:11:39,630 the few times I use selling on a stop as an entry pattern.
57 00:11:45,360 --> 00:11:58,050 What looks like in the charts, here's one example here we have a candle with a wick, we use the highest body reference point being open or close in this case,
58 00:11:58,050 --> 00:12:07,980 it's going to be the open and price trades above it just a little bit violates that doesn't make a new higher high. And it makes it run eventually for the sell
59 00:12:07,980 --> 00:12:21,870 side liquidity below the marketplace there. So a rejection block for the bullish side of the marketplace is obviously in ideal scenarios, it's in major to
60 00:12:21,930 --> 00:12:30,300 intermediate term uptrend. And the bullish rejection block is when a price low has formed with a long wick or wicks, it can be formed, there were multiple
61 00:12:30,300 --> 00:12:41,220 candles, and the low or lows of the candlestick or candlesticks. Again, it's not limited to just one candle. And price reaches down below the body of the candle
62 00:12:42,000 --> 00:12:53,520 to run the sell side liquidity out before price rallies higher. Again, we frame the rejection order block in this case the bullish rejection order block, it's
63 00:12:53,520 --> 00:13:05,610 going to be the lowest wick low and the lowest open or the lowest close that makes that swing low. On the timeframe you're looking for the pattern. Once you
64 00:13:05,610 --> 00:13:18,480 identify that you have framed the bullish rejection block. And we treat this as like a bullish order block. When price trades back down into the high of the
65 00:13:18,480 --> 00:13:29,220 block, we can be a buyer just below it. Or we can wait for price to trade through if it's a little bit longer term timeframe. We wait for it to trade
66 00:13:29,220 --> 00:13:40,380 through it by a little bit. And then we can be a buyer on a stop just above that particular level here. Again, the trigger is that high or the lowest open or
67 00:13:40,380 --> 00:13:54,960 lowest close in that swing low. But the key is it has to be a swing low that has a wick or wicks. In price action, this is what it looks like. Price makes it
68 00:13:54,960 --> 00:14:04,050 previous low with wicks Mark comes down trades down just below the bodies of the candle. And then we see a strong rejection because of a massive accumulation
69 00:14:04,050 --> 00:14:14,430 that comes in it's not always required to see a higher high for failure swing, which would be a turtle soup sell or requiring always a lower low for a
70 00:14:14,430 --> 00:14:25,350 rejection for turtle soup long. We can anticipate levels like this to be taking profits at if we're short. In this case. If the market had been trading in our
71 00:14:25,350 --> 00:14:35,610 favor on another type of setup, we could look at the take profit objectives to be covering the short just below the lowest open or close in the previous swing
72 00:14:35,610 --> 00:14:46,470 low. Don't always demand that price gets below the wicks. It's really the bodies of the candle. That closest thing to institutional under standing you're going
73 00:14:46,470 --> 00:14:55,530 to get when you're using retail price delivery mechanisms like the platform's we have to trade through for a retail perspective. Hopefully this has been
74 00:14:55,530 --> 00:15:03,270 insightful. We're going to have a lot more information as we go along. And we start talking about specifics. entry techniques we visiting all these things as
75 00:15:03,270 --> 00:15:11,670 well and amplifying them but I want you to go through your chart and look for examples of rejection blocks in their subsequent price moves after their
76 00:15:11,670 --> 00:15:14,250 formation till next time wish you good luck and good trading