In this session, we will explore the ICT Rejection Block in Forex Trading.

The ICT rejection block is one of the most powerful trading models every smart money concept (SMC) trader needs to understand and master in the forex market. When used properly, this trading model can significantly improve your profitability and consistency. Many professional traders rely on the rejection block strategy to capture high-probability trades in the financial market.

However, rejection blocks can also be misleading when identified in the wrong areas of the market. That is why you must remain disciplined and follow your trading plan strictly when applying them. A well-formed rejection block can give you a golden opportunity to trade forex successfully, but when applied incorrectly, it can lead to costly losses.

In this lesson, we will walk through:

How to identify a valid rejection block.
How to trade it effectively.
And how to avoid getting trapped by institutional traders who use liquidity grabs for their own objectives.

But always keep this in mind: nothing works 100% in forex trading. The market operates on probabilities, not certainties, and that’s why mastering risk management is absolutely crucial.

What Is a Rejection Block in Forex?

A rejection block is a three-candle sequence of price action within the Inner Circle Trader (ICT) framework where the middle or third candle forms a long rejection wick but equal bodies. It signals a strong rejection or reversal attempt at a key price level.

Here’s how it works:

Among the three candles, either the middle or the last candle usually forms a long wick (the longest wick in the sequence), while their bodies are equal.
This long wick shows that price initially pushed into a level (a previous high, low, demand, or supply zone) but was immediately rejected and reversed in the opposite direction.
This rejection often indicates that institutional traders or smart money are defending that price level, which may result in a reversal move.

In some cases, the middle candle has the longest wick, while in others, the third candle, also known as the rejection block confirmation candle, will have the longest wick. Both scenarios are valid rejection blocks.

There are two main types of rejection blocks:

Bullish Rejection Block – Found at major support or demand levels, usually after institutional traders grab liquidity.
Bearish Rejection Block – Found at major resistance or supply levels, often after institutional traders grab liquidity.

How Do I Identify a Valid Rejection Block?

Not all rejection blocks are reliable. To identify a valid rejection block, look for the following:

It must form at a key support, resistance, or order block level.
There should be clear evidence of a liquidity grab by institutional traders.
The long wick left behind must show strong rejection, meaning institutions placed significant orders at that level.

When these conditions are met, the rejection block becomes a strong point of interest. If price later pulls back to the rejection block, institutional traders often defend their orders again, pushing price away and creating an opportunity for you to enter the trade.

How Do I Trade the Rejection Block Effectively?

The most effective way to trade a rejection block is to wait for a liquidity sweep at a key level, followed by the formation of a rejection block. Here’s a step-by-step approach:

Mark the Rejection Block Zone – This is your main point of interest (POI).
Wait for Price Retest – Price will often revisit the rejection block to collect liquidity before reversing.
Drop to Lower Time Frames – Look for reversal confirmations, such as a Market Structure Shift (MSS) when price comes to retest the rejection block.
Enter After Confirmation – Don’t enter blindly. Wait for an MSS or another strong entry signal before executing your trade.
Stop Loss (SL) Placement – Place your stop loss above the rejection block if it’s bearish, or below if it’s bullish. Alternatively, use the swing point of the MSS for tighter risk.
Take Profit (TP) – Target at least 2–3 times your SL size or more, depending on market conditions. Advanced traders may also enter at the 50% level of the rejection block (consequent encroachment) for even better risk-to-reward setups.

This method has proven effective over the years when combined with patience, discipline, and proper trade management.

Final Thoughts

The ICT rejection block is a powerful price action pattern that can give you high-probability trade setups when used correctly. But remember:

Only trade valid rejection blocks formed after liquidity grabs at key levels.
Stay away from low-quality setups. Institutions often use weak rejection blocks to trap retail traders and clear their stop losses.
Always wait for confirmation signals before entering a trade to avoid manipulation.
Above all, practice strong risk management because no strategy in forex is 100% guaranteed.

In our next lesson, we will explore the ICT Order Block in Forex Trading. Don’t miss it!

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