Mitigation Block (MB); Bullish & Bearish + Mitigation Example

A Mitigation Block (MB) is a type of Order Block in the ICT Style. It disrupts the current market trend and alters the market structure.

The Mitigation Block continues the market's current trend and breaks the previous high or low. Thus, it acts as a support or resistance level for the next price movement.

What is a Mitigation Block?

A Mitigation Block (MB) is a zone where market makers settle orders before a price direction changes. This area often acts as a support or resistance level.

Example of a Mitigation Block

The price initially moved upward in the XAG/USD 15-minute chart, forming higher highs (HH) and higher lows (HL).

Upon reaching a bearish reference area, it could no longer create a new high and began to decline.

Then, the price broke the previous low, turning the market structure bearish. This formes the Mitigation Block, and subsequently, the price returnes to this block, providing a suitable selling opportunity.

How to Identify a Mitigation Block?

To identify and trade with Mitigation Blocks, we divide them into two types:

#1 Bearish Mitigation Block

This block forms at the end of an upward trend. When the price reaches a strong bearish level, it fails to create a higher high (HH) and instead forms a lower high (LH).

Then, it breaks below the previous higher low (HL), signaling a market structure change toward bearishness.

Steps to Identify a Bearish Mitigation Block

1. The price reaches a key level on a higher timeframe.
2. On a lower timeframe, this sequence occurs:
   • The price creates a Higher High (HH) and a Higher Low (HL)
   • The Higher Low (HL) fails to create a new high, and the price breaks below it
3. A Break of Structure (BOS) occurs, forming a Lower High (LH).

Note: The area between the broken low and the Lower High (LH) is the Bearish Mitigation Block.

This zone marks where traders reduce their losses in the rally, and smart Money initiates selling.

#2 Bullish Mitigation Block

This block forms at the end of a downward trend. When the price reaches a strong support level, it fails to form a lower low (LL) and instead creates a higher low (HL).

Then, it surpasses the previous lower high (LH), signaling a market structure change toward bullishness.

Steps to Identify a Bullish Mitigation Block

1. The price reaches an important support zone on a higher timeframe.
2. On a lower timeframe, this sequence occurs:
   • The price creates a Lower Low (LL) followed by a Lower High (LH)
   • The Lower High (LH) fails to create a new low and the price breaks above it
3. A Break of Structure (BOS) occurs, forming a Higher Low (HL)

Note: The area between the broken high and the Higher Low (HL) is the Bullish Mitigation Block. In this zone, traders who sell during the downtrend reduce their losses, and smart Money initiates buying.

Difference Between Mitigation Block and Breaker Block

Although Breaker Blocks and Mitigation Blocks are reversal patterns with significant similarities, there are key differences:

#1 Functionality

• Mitigation Block: The zone where smart Money settles pending orders before the price direction changes.
• Breaker Block: The zone where price breaches confirm the break of the previous trend and continue in the new direction.

#2 Market Structure

• Mitigation Block: The price doesn't reach or sweep the previous high or low. Instead, it halts and fails to move higher (in an uptrend) or lower (in a downtrend). The market structure then shifts, creating a new direction.
• Breaker Block: This block forms when the price breaks the previous high or low. After this break, the market structure changes, and a new trend begins.

Conclusion

The Mitigation Block identifies key market zones where the market structure changes. It offers excellent trading opportunities for buying or selling, allowing traders to align with Smart Money movements.