Mitigation blocks are price levels where institutional traders return to 'mitigate' or close out prior losing positions before continuing in the new trend direction. When smart money takes a position that initially moves against them, they mark the level for re-entry — when price returns, they close the losing trade at break-even and add to their new directional position. This creates a powerful support or resistance zone.
A mitigation block is a failed order block — an area where smart money was initially wrong. Price returns to this level so institutions can close losing positions at break-even. After mitigation, price typically continues aggressively in the new direction. Mitigation blocks are found by identifying order blocks that were violated. They function similarly to order blocks but with the added context of loss recovery.
Identify an order block that was broken (invalidated) by a move in the opposite direction. Wait for price to return to the broken order block level — this is the mitigation block. Enter when price reaches the mitigation block and shows rejection with a lower-timeframe market structure shift. Confirm with displacement (strong impulsive candles) away from the mitigation level.
Target the next significant structure level or liquidity pool in the direction of the new trend. Place stops beyond the mitigation block with a small buffer. Partial profits at the first fair value gap or order block in the path of the move. Exit if price trades through the mitigation block without rejection, indicating the level has failed.
5M, 15M, 1H, 4H
Mitigation blocks are among the most misunderstood SMC concepts — the key is recognising that they represent institutional loss recovery, which creates urgency and conviction at the level. Not every broken order block becomes a valid mitigation block; look for a clear change of character and displacement after the initial break. Combine mitigation blocks with inducement sweeps for the highest-conviction entries.
Institutional candles (also called displacement candles or impulse candles) are large-bodied candles with little to no wicks that represent strong institutional activity. They break through structure and create FVGs. The characteristics of these candles — body size, wick ratio, volume — reveal where institutions are committing capital.
Premium and Discount zones divide the current price range (from the swing low to swing high) into halves using the equilibrium (50%) level. Discount = below 50% (cheap, look to buy). Premium = above 50% (expensive, look to sell). This concept ensures traders are buying low and selling high relative to the current range.
The Optimal Trade Entry is an ICT concept that identifies the highest-probability retracement zone for entering trades in the direction of the prevailing trend or order flow. The OTE zone sits between the sixty-two and seventy-nine percent Fibonacci retracement of the most recent impulsive leg, which aligns with institutional re-entry pricing. Entries at the OTE provide favourable risk-to-reward ratios because the stop is placed just beyond the swing point.
An order block is the last opposing candle before a strong institutional move — the final bearish candle before a bullish impulse (bullish OB) or the final bullish candle before a bearish impulse (bearish OB). Order blocks represent zones where institutions placed large orders, and price tends to return to these zones for continuation.