Mitigation Block
Also: M pattern, failure swing mitigation
A mitigation block is the last {direction}-opposing candle (last down candle in a bearish setup / last up candle in a bullish setup) found inside the short term swing that preceded a market structure break. When a short term low is formed during a rally, then a subsequent market structure shift breaks below that low (bearish) / above that high (bullish), the long positions taken inside the swing from point A to point B are now underwater. The last down candle (bearish) / last up candle (bullish) inside that prior swing is highlighted as the mitigation block — the level where those trapped longs (or shorts) will seek to liquidate when price retraces back to it. The entire body of the candle (open to close) is used, not just the bottom.
Identification5
- Identify a short term swing: a short term low (A) rallies to a short term high (B) — this creates the M pattern range in a bearish context.
- Wait for a market structure break: price breaks below point A (bearish) / above point B (bullish) at a subsequent later time — there is no rule on how long this takes.
- Inside the swing from A to B, locate the last {direction}-opposing candle — the last down candle immediately before the short term rally (bearish) / last up candle before the decline (bullish).
- Mark the full body range (open to close) of that last down/up candle as the mitigation block level.
- The mitigation block is the level formerly known as the short term low (A) — when price returns to it, it is viewed as a resistance (bearish) / support (bullish) reference point.
Entry3
- When price retraces back up into the last down candle (bearish) / last up candle (bullish) of the prior swing, enter short (bearish) / long (bullish) anywhere inside the full body of that candle.
- Entry is valid at the bottom of the body — ICT notes 'we can be a seller down here' using the full body range.
- A slight overshoot of the body is acceptable as long as price remains inside or near the body of the candle — ICT observes 'it shoots it just overshoots it by a little bit' and the setup still triggers.
Stop2
- Stop is placed above the high of the mitigation block candle (bearish) / below the low of the mitigation block candle (bullish).
- Example from the transcript: entry at 112.62, stop above the candle high at 112.29 area — approximately 20 pips of drawdown tolerance.
Target3
- Primary target is the short term low that was broken (point A, now acting as an objective) — run liquidity out below that low (bearish) / above that high (bullish).
- Extended target is the higher timeframe support level (old high, old low, bullish order block, or other institutional reference point) below (bearish) / above (bullish) the market.
- Intermediate target: the mean threshold (50% equilibrium) of any liquidity void between the mitigation block and the support level.
Invalidation2
- Price closing convincingly through the entire body of the mitigation block candle (above the high of the body for a bearish mitigation block) without reversing removes the setup.
- If the higher timeframe bias is not confirmed in the same direction, the mitigation block setup is reduced in probability.
ICT Quotes
"this is what is referred to as an M pattern. Why? Because it looks like a giant M. Okay, well, when you have this pattern here, it's a failure swing with a confirmation break in market structure."
"premium price highs are bought by less informed traders and sold by smart money, which are you going to be grouped in?"
"the classic support broken turns resistance everytime price moves back to an old low actually happening is is referred to as buyer's remorse. The buyers at the previous short term loan that saw a short term pop in their favorite and eventually saw the market break below that low they bought that when price gets back to that level. They're remorseful for buying it so they bail. But on an institutional level, the smart money understands these short term fluctuations and they can drive price on a short term basis, higher or lower through manipulation."
Timeframes
Version History1 version
28-ICT Mentorship Core Content - Month 4 - Mitigation Blocks.srt
"This short term rally in price highlights a specific institutional reference point known as the mitigation block."
Notes
The M pattern label applies specifically to the bearish variant (two highs with a lower middle — visually resembles M). The bullish variant is the W pattern by mirror logic, though ICT does not name it explicitly in this file. ICT uses the ABC labelling: A = short term low, B = short term high, C = subsequent lower low after the market structure break. The mitigation block sits at the A level — specifically the last down candle immediately before the AB rally. The transcript includes a live USDJPY 30-minute example demonstrating the body of the candle being used as the full sell zone (not just the bottom). ICT notes further teaching will be provided in the December 2016 PDF study notes.