Rejection Block Trading Strategy for Entries After Wick Rejection

What Is a Rejection Block in Trading?

A rejection block is a zone marked on the wick of a candle, at an important swing high or swing low. The wick shows the area at which price tried to go and couldn't hold, so the zone outlines an area which has already been rejected by the market.

The term comes from ICT terminology, and the ICT rejection block has one key property, which should be stated upfront: the wick-based nature of the concept. Most of the zone-related concepts are drawn from the candle body, but this one focuses on the portion of the candle that records a rejection rather than a result.

Understand what that implies. Rejection block trading strategy defines a level by rule rather than by eye, and tests its validity later on. It does not guarantee support, resistance or a reversal. Price has no obligation to respect an area simply because it has been rejected from it once, and many of the zones marked will be eventually penetrated.

How to Identify and Mark a Rejection Block

There are four criteria, in order. The first and the last one are what stop you marking every wick on the chart.

Selecting a Significant High or Low

The wick should sit at an important extreme point. A significant swing high is one that a visible move downwards came away from, or that stopped a preceding advance. A significant swing low is the mirror version.

A long wick in the middle of the range is a wick alone. The level has to be one which the market was already paying attention to. That is usual support and resistance work, explained in detail in this guide to the Pocket Option support and resistance strategy.

Waiting for the Rejection Candle to Close

Nothing is to be outlined until the candle has closed. A forming candle can have its wick absorbed into the body before the close, which shifts both sides of the zone as you try to outline it.

One note to add: this is not limited to a single candle. Several adjacent candles might have left their wicks at the same important extreme, and the zone will cover the entire group, from the most extreme edge of the body among them to the furthest wick.

Marking the Zone from the Body Edge to the Wick Extreme

This is the convention to be followed throughout, and it remains constant in all examples.

• At a high, the zone goes from the highest body edge (that is, the higher of open and close) to the highest wick. That is the upper wick zone.

• At a low, the zone goes from the lowest body edge (that is, the lower of open and close) to the lowest wick. That is the lower wick zone.

Thus, the zone is exactly the long candle wick. The body is not included.

Different conventions exist. Some outline only the outer half of the wick; some use the close rather than the body edge as the side of the zone, expanding the zone at a candle which didn't close at its extreme point. All can be justified. What cannot be justified is switching from one convention to another, because a narrower zone will affect both entry and invalidation, and a strategy defined with a moving ruler cannot be backtested.

Assessing the Move Away from the Zone

This is the step usually omitted. Price needs to move away with some conviction for the zone to become meaningful.

If price gets rejected at a high and then hovers right under it, no information is derived. If it is rejected and moves away for a considerable distance, the rejection has produced a consequence. The practical test: the move away should be at least two or three times the height of the zone, measured before you consider any retest.

Bullish Rejection Blocks

A bullish rejection block appears at a swing low. Price tries to fall, finds no acceptance, and closes back up, leaving a long lower wick.

The zone lies below the bodies, between the lowest body edge and the lowest wick. An attempt to sell lower failed there. If price returns and fails to continue falling, the setup is a long-side one, and the invalidation will lie just below the wick extreme.

Note what it does not tell you. It doesn't say that buyers are waiting there. It just says that sellers were not able to hold the level once, which is a good reason to pay attention rather than to expect anything.

Bearish Rejection Blocks

A bearish rejection block is the inverted version. Price tries to rise to the high, cannot hold at it, and closes lower, producing a long upper wick.

The zone lies above the bodies, from the highest body edge to the highest wick. A return which does not succeed in continuing its climb is a short-side setup, and the invalidation will lie above the wick extreme. The structure is the same in both cases, so there is only one procedure to learn, while the direction changes only the side of the body to be measured from.

Rejection Block vs Pin Bar vs Order Block

Those terms are often used interchangeably, but they are not the same things. Two of them are zones, the third one is a pattern.

Candle Formation vs Retest Zone

A pin bar is a candle formation, recognized by its shape: a candle with a small body and one long wick. Traders usually act on it directly, at its close or break of its extreme.

The zone is what this formation leaves behind. You do not trade the candle. You outline the wick, wait, and see what happens if price retests it. The same candle can be used in both ways: a pin bar for the one who wants to enter immediately and a rejection block for the one waiting for the retest.

Wick-Based Zones vs Order Block Selection

An order block is selected in a different way: the body of the last opposing candle before a strong directional move, depending on its direction and its position relative to this move.

So the two concepts are constructed from the opposite parts of the candle, using different criteria. One concerns the candle which preceded the move; the other concerns the wick at the extreme point which the move came away from. These concepts might coincide on a chart, and if they do, it is a coincidence of location rather than two definitions of the same concept.

Comparison Table

How to Assess an Entry on the Retest

The retest is the trade, and it requires conditions to be set before price arrives.

1. Price enters the zone. A contact with the boundary is not a retest; price needs to trade inside the zone.

2. A completed lower timeframe candle closes back out of it, on the same side as the initial rejection. A wick back out is not counted as a close.

3. The wick extreme has not been surpassed yet. Once it is, the area is accepted, not rejected.

4. The invalidation extends just beyond the wick extreme, noted before entry.

5. Position size follows from the distance between entry and invalidation, which the height of the zone largely decides.

The practical consequence follows: a taller zone implies a wider invalidation and a smaller position size for the same risk, so an extremely wide zone might become untradable on a small account. The broader mechanics of reading such turns are explained in this guide to reversal and pullback trading and how to read swings on charts.

Bullish and Bearish Retest Examples

Two hypothetical examples with invented levels, designed to demonstrate the arithmetic rather than to depict real trades.

Bullish case. The daily candle at a swing low opens at 1.0820, closes at 1.0845, and prints a low of 1.0788. As the candle closes higher, the lower body edge is the open, and the zone goes from 1.0788 to 1.0820, which is 32 pips. Price then climbs to 1.0920, 100 pips above the zone top, satisfying the move away requirement. Then price returns, trades down to 1.0801 in the zone, and a 15-minute candle closes at 1.0826 above the zone. An entry there exposes 38 pips of risk for 94 pips to the 1.0920 high, resulting in a 2.5-to-1 ratio.

Bearish case. The 4H candle at a swing high opens at 1.0935, closes at 1.0908, and prints a high of 1.0968. As the candle closes lower, the higher body edge becomes the open, and the zone goes from 1.0935 to 1.0968, spanning 33 pips. Price then falls to 1.0860, about 75 pips below the zone. Upon retesting it, price reaches 1.0952 inside the zone, and a 5-minute candle closes at 1.0929, below it. An invalidation above 1.0968 exposes 39 pips of risk against 69 pips to the 1.0860 low, or a 1.8-to-1 ratio.

Those two ratios are deliberately different. The ratio is controlled by zone height and distance to the nearest structural points, aspects which are not controlled by you, so the setups do not give you a fixed payoff. Some are worth taking, and some are not. The decision is made based on measurements, not on the appearance of the setup.

When to Invalidate or Cancel the Setup

A zone needs both an expiration date and a price which defeats it.

• The wick extreme has been surpassed. Price has accepted the area it has rejected previously, so the setup is defeated.

• Price closes inside it several times without breaking out of it. The area is being absorbed, not rejected.

• The structure behind the extreme has broken. Once the swing which produced the high or low has been violated, the level loses importance.

• Too much time has passed. Define a window, say a number of candles on the reference timeframe, and invalidate untested zones.

• It has already been retested once and failed. The second retest of a failed zone is weaker, not the repetition of the first.

The latter two points are usually ignored. Old zones accumulate, and a chart stuffed with them always has one near the current price, creating an impression of a setup at every turn.

Failed Rejection Block Examples

Setups fail on a regular basis, and understanding the ways they fail is useful before you meet them with money on the line.

• Price goes straight through. The retest produces no reaction, and the zone is breached like there was nothing there. The most common failure, and the least discussed.

• It holds, and then fails on the second visit. It is enough to transform a profitable analysis into a loss, if you have considered the first reaction to be a confirmation.

• The wick represented liquidity, not rejection. A spike through an obvious high can trigger a move rather than get rejected, and it leaves a wick identical to that formed by a genuine rejection.

• The zone was too wide to trade. The arithmetic was wrong all along at a reasonable position size.

• There was no genuine move away. The zone was outlined on a wick that price stayed near, so no information was gathered and the retest had no meaning.

And there is a selection bias linked to wick-based zones. Long wicks are everywhere, and after a move you can always find a suitable one. Outlining it after the fact explains the chart, but does not predict anything. The correct way is to outline it before the retest, write down your conditions, and keep the record, including the ones which did nothing.

Testing Rejection Block Retests on Demo

A demo account can show whether you are able to use the marking rule consistently, which is different from the question of whether the zones are valid.

1. Write down the rule first: what counts as a significant extreme, your marking convention, the move away test, the retest trigger, and the time window.

2. Select one instrument and one reference timeframe, and keep both fixed.

3. Outline zones live, before the retest, and save the screenshots. Outlining them after the fact is not proof.

4. Log every zone which met your conditions, including those which were never retested and those which failed.

5. Review after a predetermined number of zones, not days, so the sample size drives the conclusion.

Be straight about the limits. Demo results do not indicate future results in live trading, and a few dozen zones on one instrument are not a large enough sample to establish the presence of any edge. See this guide to backtesting trading strategies and turning raw ideas into tested plans.

Conclusion

The value lies in the marking rule, not the zone. A fixed rule turns a subjective impression about a long wick into something you can test, pass, or fail.

So keep it fixed. Require a significant extreme, wait for the candle to close, measure from the body edge to the wick extreme, and demand a real move away from it before considering it a valid zone. On a retest, wait for the candle to close out of it rather than just touch it, and place your invalidation beyond the wick extreme before entering. Treat every instance as a question rather than a level which will definitely hold, and keep the record of the ones price walked straight through, because that record will tell you if the idea is worth pursuing.

Disclaimer: This article is provided for purely educational and informational purposes and neither provides investment advice nor recommendations for using any particular trading strategy. The levels and order of levels are provided in the hypothetical form to show the technique of marking and do not represent the real movement of the price. Rejection blocks are a charting technique and there are no statistical proofs for this. Trading is highly risky and involves a high level of losses.