Key Concepts

• Rejection at New Highs/Lows: Anticipate price rejection whenever a new high or low is formed. This is a critical skill in understanding price action.
• Price Dynamics: Movement into a Premium Distribution Array signals potential distribution. Recognize patterns like bull flags in this context.
• Failure Swings: Price does not need to create a higher high to indicate a failure swing. Attention should be on the open, high, low, and close of candles.
• Charting Price Action: Focus on swing highs and lows; track open, high, low, and close. Understanding distribution and accumulation occurs at these turning points.
• Wick Analysis: Wicks highlight potential patterns but are not the primary focus. Use the highest close/open at swing highs, regardless of the candle’s bullish or bearish nature. Identify bearish order blocks via wicks.

Rejection Blocks

Bullish Rejection Block

Definition: A bullish rejection block forms at a swing low, indicating potential price reversal to the upside.

Identification: Look for the lowest open and the lowest wick of a bullish candle. This area represents institutional buying interest, as buyers step in to push prices higher.

Usage: Traders may enter long positions when price approaches the bullish rejection block, expecting a bounce due to buying pressure.

Bearish Rejection Block

Definition: A bearish rejection block forms at a swing high, suggesting potential price reversal to the downside.

Identification: Identify the highest open and the highest wick of a bearish candle. This area signifies institutional selling interest, as sellers enter to push prices lower.

Usage: Traders may enter short positions when price nears the bearish rejection block, expecting a decline due to selling pressure.

Additional Strategies

• Consider using a sell stop order when price trades above the close and then retraces.
• Alternatively, enter on the close or after a slight trade above it.
• Accumulation/distribution can form over multiple candles; identify bullish order blocks using the lowest open and wick from bullish candles.
• Prioritize swings that have wicks; focus more on the bodies of the candles.
• Look for rejection blocks when old highs/lows exhibit long wicks, indicating potential reversals.

Understanding these concepts, including bullish and bearish rejection blocks, can enhance your trading strategies. Focusing on swings, candle bodies, and the significance of wicks will help you navigate accumulation and distribution more effectively, allowing for better decision-making in the market.