Rejection Block in Trading: Meaning and Examples

What Is a Rejection Block in Trading?

A rejection block usually shows up when the price does something that looks convincing at first. It pushes through a level, grabs what’s sitting there, and for a moment it feels like it’s about to keep going. Then it doesn’t.

Price runs the high or the low, snaps back inside, and leaves a level behind. That’s the part that matters. It’s not just a long wick, it’s where the market tried to move on and quietly got shut down. Most of the time, that happens right where stops and breakout orders tend to build up.

Source: OpoFinance Blog

When the price returns to that area, behaviour often changes. Momentum fades, reactions sharpen, or price hesitates. That’s why rejection blocks matter in ICT and SMC  they mark where the market tried to continue and couldn’t.

How a Rejection Block Forms

A rejection block forms when the price goes looking for liquidity and doesn’t get what it needs to keep moving. The market pushes beyond a level that looks important, triggers orders, and then quickly runs out of momentum. What’s left behind is the area where that move failed.

Source: OpoFinance Blog

Liquidity Sweep and Failed Continuation

Most rejection blocks start with a liquidity sweep. Price pushes above a high or below a low, clears the stops sitting there, and pulls in breakout traders. For a moment, everything points to continuation.

Then the price can’t hold it. It loses momentum, moves back inside the range, and closes where it was before. That’s the key detail. When a move has real strength, it stays accepted above or below the level. When it doesn’t, it usually means the move was about taking liquidity, not about going further.

Why Rejection Blocks Form at Market Extremes

Rejection blocks tend to form around clear highs and lows because that’s where orders naturally build up. Levels like equal highs, equal lows, session highs, or old swing points attract stops and breakout interest over time.

When price eventually reaches those areas, the move is often sharp. Liquidity gets taken, but once that happens, there’s often very little left to keep the move going. That’s why rejection blocks show up so often at extremes. They mark the point where price pushed as far as it could and then stepped back.

Bullish and Bearish Rejection Blocks

Rejection blocks come in two forms, depending on which side of the market gets rejected. The logic is the same in both cases. What changes is the direction of the failed move.

Bullish Rejection Block

A bullish rejection block shows up when the price dips below a low and can’t stay there. The move takes out sell-side liquidity, triggers stops, and then quickly moves back up, closing above the level it just broke.

What you normally notice is:

• A clear sweep of old lows or equal lows

• A strong lower wick

• Price closing back inside the previous range

That lower wick matters because it shows the sell-off didn’t stick. Selling was absorbed and the market refused to accept lower prices. When price returns to that area later on, it often behaves like support or at least forces the market to slow down and react.

Source: OpoFinance Blog

Bearish Rejection Block

A bearish rejection block works the other way around. Price pushes above a high, clears buy-side liquidity, and for a moment, it looks like the breakout is on. Then it stalls and drops back below the level.

You’ll usually see:

• A sweep of old highs or equal highs

• A clear upper wick

• Price is closing back under the level

That upper wick is the clue. It shows that buyers couldn’t keep the price accepted higher. The move up was rejected. When the price comes back to that area later, it often acts like resistance or turns into a spot where momentum changes again.

Source: OpoFinance Blog

Basic Trading Setup - Entry, Exit, Stop-loss Rules 

A rejection block is not a trade by itself. It’s a reference point. How you use it comes down to how price behaves when it returns to that area and how it fits within the broader context.

Entry

The first rejection isn’t usually the moment to act. It simply shows that price was turned away. What most traders watch for is the return. When price comes back into the rejection area, that’s when the behaviour starts to matter.

On that second visit, price often loses the urgency it had before. Moves get smaller, progress slows, and the level starts to show whether it still has weight. That’s typically where entries come into play, especially when the rejection lines up with structure, nearby liquidity, or the broader market direction.

Stop-loss

Rejection blocks tend to be very clear about when they’re no longer valid. If price trades beyond the rejection and stays there, the original idea breaks down.

For that reason, risk is usually defined beyond the rejection candle itself, above the high in a bearish case, or below the low in a bullish one. Once price accepts beyond that point, the rejection has done its job and failed.

Exit

Targets are not defined by the rejection block, but by structure. Previous highs or lows, internal range levels, or nearby liquidity pools are often used as reference points. 

The rejection block provides the reason for the trade, while market structure helps define how far price is likely to move.

Used this way, rejection blocks help frame risk and intent. They’re not about precise entries, but about understanding where continuation was tested and rejected, and how price responds when it comes back.

Rejection Block in ICT and SMC

You’ll hear rejection blocks mentioned a lot in both ICT and SMC, sometimes as if they were different concepts. In practice, they describe the same price behaviour, just viewed through slightly different lenses.

ICT Rejection Block Explained

A rejection block is all about that lack of follow-through. Price pokes its head above a high or below a low, takes the cash, and then loses all momentum. It’s the fact that it fails to hold and closes back inside the previous range that defines the block. That wick it leaves behind is the visual evidence that the level was rejected.

What matters in ICT isn’t just the candle, but the sequence behind it:

• Liquidity is taken

• Price fails to hold beyond the level

• Market structure begins to shift

Rejection Block in SMC

In Smart Money Concepts, rejection blocks are less about the candle itself and more about what price failed to do. The market pushes into an area, liquidity gets cleared, and then the move runs out of steam.

From an SMC point of view, a rejection block marks the spot where price wasn’t accepted. When price comes back to that area later, it often reacts because that failed push is still part of the structure.

Rejection Block vs Rejection Order Block

Some traders use the term rejection order block, but it’s not a different concept. Most of the time, it’s just a rejection block described with order block language.

An order block is where a move starts. A rejection block is where a move fails after liquidity is taken. If the level comes from a failed push and a clear rejection, it’s a rejection block, regardless of the name.

Rejection Block vs Order Block

A rejection block and an order block might look similar on the chart, but they come from very different moments in price. An order block forms before a strong move, where buying or selling is built. A rejection block forms after a move fails, when price tries to continue and gets pushed back.

The difference is timing. Order blocks are about where a move starts. Rejection blocks are about where a move is refused. That’s why rejection blocks often show up later in the structure, usually after liquidity has already been taken.

Rejection Block vs Breaker Block

A rejection block is an early signal. It tells you the price tried to go further and couldn’t. A breaker block comes later, once the structure has actually broken and flipped.

The rejection block is the first sign that something may be shifting. The breaker block comes later and confirms that the shift has already taken place.

A Clear Rejection Block Example

A clear rejection block shows up when price breaks a level everyone is watching but can’t hold it. The move looks real at first, then price slips back inside the range and closes there.

The wick tells you how far price tried to go. The close tells you it wasn’t accepted. That failed follow-through is what matters, not how big the candle is.

When price comes back to that area later, behaviour often changes. Momentum fades, reactions get sharper, or price hesitates. That’s why rejection blocks stand out. They mark levels where the market already tried to continue and backed off.

Source: Hydra, via X

When Rejection Blocks Work Best

Rejection blocks don’t show up randomly. They tend to work best when the market is already in a place where a reaction makes sense.

Liquidity Sweeps and Key Highs or Lows

Rejection blocks are strongest after a clean liquidity sweep. That usually means:

• Old highs or lows getting taken out

• Equal highs or equal lows being cleared

• A visible push that doesn’t hold

In ICT terms, this is the moment when liquidity is taken and price fails to find acceptance beyond the level.
 

Premium and Discount Zones

Where price sits in the range matters more than the rejection block itself. These levels tend to carry more weight when they show up in areas where a reaction already makes sense.

A bearish rejection block usually has more meaning when price is trading in premium. A bullish one tends to make more sense in discount. When that lines up with the higher-timeframe bias, the rejection feels less random and more like a natural pause or failure in the move.

That’s why this fits so well with the ICT premium-discount framework. Rejection blocks often highlight where price tried to keep going in those areas, and couldn’t.

When Rejection Blocks Fail

Rejection blocks don’t work every time, and that’s normal. Most failures come down to context, not the level itself. When the price is moving fast and with strength, a single rejection often isn’t enough to slow it down.

They also tend to fail when:

• Price hits the level with strong momentum

• There’s no clear liquidity sweep beforehand

• The rejection goes against the higher-timeframe bias

How Rejection Blocks Fit Into Market Structure

Rejection blocks make the most sense when you see them in the bigger picture. They often show up right after liquidity is taken and just before structure starts to shift. A break of structure is usually what confirms whether that rejection led to a real directional change.

They’re not meant to be traded in isolation. A rejection block is more like a clue. It tells you where continuation was tested and questioned. What price does next, how it breaks or holds structure, is what confirms whether that rejection really mattered.

Conclusion

Rejection blocks are not special levels on their own. They simply show where the price tried to move further and didn’t manage to. That information, in the right context, can tell you a lot about what the market is actually doing.

When you start paying attention to rejection blocks, charts usually feel a bit clearer. You’re not reacting to every push anymore. Instead, you start noticing where the price actually tried to go somewhere and didn’t get accepted. Those moments tend to tell you more than the move that came before.