A different approach to looking at distribution and accumulation
I want to teach you tonight a different approach to looking at distribution and accumulation
There are other distribution and accumulation patterns that take place at highs and lows
Price does not need to make a higher high to have a failure swing
You may have noticed these old highs being violated and a significant movement away from that and we understand this as a turtle soup or a false breakout
Every time a new high or low is formed we expect some measure of rejection — that's the first anticipatory price skill set you should be working towards developing because it's the hardest one to groom in your trade psychology
It's not always required to see a higher high for a failure swing which would be a turtle soup cell or requiring always a lower low for a rejection for a turtle sheep long
"The bearish rejection block is when a price high has formed with long wicks on the high or highs it can be more than one candle that forms a high of the candle stick or sticks and price reaches up above the body of the candle or candles to run the buy side liquidity out before the price declines"
"The ideal setups are found in major to intermediate term downtrends"
Take notice of the highest body in this formation and the most recent candle that traded through it
Price pushes above the previous highest candles body... that run above the highest body's candle produces the distribution
"A bullish rejection block is when a price low has formed with a long wick or wicks it could be formed over multiple candles and the low or lows of the candle stick or candle sticks again it's not limited to just one candle and price reaches down below the body of the candle to run the sell side liquidity out before price rallies higher"
"In ideal scenarios it's in major intermediate term uptrends"
Price makes a previous low with wicks mark comes down trades down just below the bodies of the candle and then we see a strong rejection because of a massive accumulation that comes in
When you see the wick you have to build the parameters for the rejection block by finding the highest high and the highest open or close in the swing high
It does not matter if the highest candle is a bearish or bullish closed candle you're still looking for the highest high with the highest open or closing price into the highest wick — that frames the rejection block
Once we have the rejection block defined by the highest wicks high and the highest open or close in the swing high that frames the rejection block and in your mind you should be viewing it like we have here a candle all and of itself
We frame the rejection order block in this case the bullish rejection order block it's going to be the lowest wick low and the lowest open or the lowest close that makes that swing low on the time frame you're looking for the pattern
"This range is going to be a selling block in other words we treat this as a bearish order block"
"We treat this as like a bullish order block when price trades back down into the high of the block we can be a buyer"
When price trades back up to the low of that range that is your trigger
"If you're aggressive you can sell at that price and put a significant stop loss above that particular price level"
"You can wait for the trade through it a little bit"
"You can wait for it to trade above that level and if it moves significant amount above that highest open or close... if it trades above that particular level and it does not trade to a higher wick high you could be a seller on a stop below that level so that way you can be selling on weakness"
This is one of the few times i use selling on a stop as an entry pattern
Again the trigger is that high or the lowest open or the lowest close in that swing low but the key is it has to be a swing low that has a wick or wicks
Price does not move around because of animal patterns or supposed geometry in price action it's based on the orders
The wicks are just drawing your attention to a potential rejection block
It's really the bodies of the candle that the closest thing to institutional understanding you're going to get when you're using retail price delivery mechanisms like the platforms we have to trade through from retail perspective
If you follow every swing high and low and you chart the open high low and close and you deal specifically with the opens and closes you'll be able to fare it out what distribution and accumulation takes place at these turning points
We can anticipate levels like this to be taking profits at if we're short in this case if the market had been trading in our favor on another type of setup we could look at the take profit objectives to be covering the short just below the lowest open or close in the previous swing low
Don't always demand that price gets below the wicks it's really the bodies of the candle