Rejection Block: Institutional Price Rejection at Long Wicks

Rejection Block (RB) is the value area concentrated at the candlestick part (Wick) of an important swing high or swing low. This is where extreme price rejection was recorded, where the IPDA algorithm triggered large counter orders to liquidate the market.

1. Nature of Algorithm & How to Determine Rejection Block

When the price quickly pushes towards a large liquidity zone, Smart Money will quickly match their Limit order and then withdraw to create a long candlestick. This candlestick is the Rejection Block:

Bullish Rejection Block (RB Increase): Determine that the Swing Low candle has a long lower wick. Measure and draw from price Open or Closed (the lowest candle body) extends down Lowest Low of the lower wick.
Bearish Rejection Block (RB Reduce): Determine that the Swing High candle has a long upper wick. Measure and draw from price Open or Closed (the highest candle body) extends up Highest High of the upper wick.

2. Why Is Rejection Block So Sensitive?

Smart Money usually cannot match 100% of large orders in a split second of withdrawing the first candlestick. The IPDA algorithm tends to push the price **back to retest at least 50% of the length of that candle's wick** (or touch the closing/opening price of the high/low candle) to match the remaining Limit pending orders before actually reversing away.

Cơ chế phản ứng giá tại khối lệnh Rejection Block trên TradingView

📷 Figure 8.1: Actual Bearish Rejection Block on Nasdaq 1-hour chart. The price regressed to an exact retest of the candle's wick area (do not close the candle beyond 50% of the wick length) before falling sharply.

3. How to Trade & Manage Risk

Optimal Entry Point: Place a Limit pending order right at the closing/opening price of the candle body (starting point of the wick) or at 50% of the length of the candle's wick.
Stop Loss Point (SL): Place your stop loss a few pips away from the highest/lowest price (the tip of the candle's wick). This gives an extremely optimal R:R ratio because the stop loss is much shorter than waiting for the price to create a new OB.
Quality candle beard filter: Only choose Rejection Blocks at large structural tops/bottoms (H4/D1) or when the wicks clearly sweep across important BSL/SSL liquidity milestones. Avoid small candle wicks during periods of sideways and non-trending markets.