The Power of the Wick: Rejection Blocks and Wicks

This lesson explores the story told by long wicks on candles and introduces the concept of a Rejection Block as a specific Point of Interest.

Introduction: More Than Just Rejection

In basic candlestick analysis, a long wick (or shadow) signifies price rejection. In Smart Money Concepts, we interpret this with more nuance. A long wick often represents a rapid liquidity grab or stop hunt. Price moved quickly to an area of liquidity, took out the orders resting there, and then reversed sharply, all within the same candle.

The entire wick, from its extreme to the candle's body, can be considered a Point of Interest (POI) because it's a zone where a significant institutional maneuver took place.

What is a Rejection Block?

A Rejection Block is a specific type of POI defined by a candle with a very long wick. The key is how price interacts with this wick later.

• Definition: A candle with a long wick that sweeps liquidity from a prior high or low. The Rejection Block is the wick itself.
• Mitigation: Price will often return to mitigate this zone. Traders look for entries within the wick, often at the 50% level of the wick or near the candle body's open/close.

Why Rejection Blocks Work

The formation of a long wick represents a rapid and aggressive move by Smart Money. They pushed price to a specific level to engineer liquidity and then reversed it forcefully. This entire price run (the wick) is an area of significant institutional interest. When price returns to this zone, it's likely to encounter the remainder of those institutional orders, leading to another reaction.

How to Identify and Use Rejection Blocks

1. Find a Candle with a Long Wick: Look for a candle where the wick is significantly longer than the body.
2. Confirm Liquidity Sweep: The wick should have clearly traded above a previous swing high or below a previous swing low.
3. Mark the Zone: The entire wick, from its extreme high/low to the candle body, is your Rejection Block POI.
4. Wait for Mitigation: Be patient and wait for price to trade back into this zone (the wick).
5. Look for Entry Confirmation: As with other POIs, look for a reaction on a lower timeframe as price enters the Rejection Block. This could be a shift in structure or a reversal pattern.

Conclusion

Don't dismiss long wicks as mere noise. In the world of SMC, they are valuable clues that tell a story of liquidity engineering and institutional intent. By identifying Rejection Blocks and understanding that the entire wick can be a point of interest, you can uncover high-probability trading setups that others might overlook.

In the final lesson of this course, we will bring all these concepts together to discuss Building a Complete SMC Trading Model.