What Are Mitigation Blocks and How to Use Them?

Discover how to identify, trade, and profit from mitigation blocks and order flow areas, key price zones where smart money influences the markets.

Navigating the financial markets often requires a deep understanding of nuanced price-action techniques, especially for traders looking to move beyond standard support and resistance. One such advanced tool is the mitigation block, originally popularized within “smart money” or institutional trading circles, including the ICT (Inner Circle Trader) approach. Over time, mitigation blocks have gained traction in mainstream technical analysis, particularly among price-action traders.

We previously discussed smart money concepts in our ultimate guide, Mastering the Smart Money Approach to Forex Trading.

But what is a mitigation block? And how do traders effectively incorporate mitigation block ICT concepts into their strategies? This in-depth guide provides a comprehensive overview of mitigation blocks, shows you how to identify bullish and bearish mitigation blocks, demonstrates mitigation block vs. breaker block distinctions, and offers mitigation block examples that clarify how these zones can help manage risk and improve trade entries.

What is a Mitigation Block

A mitigation block is a price zone or candle in the chart that represents where “smart money” or institutional orders have previously influenced market flow, later returning to “mitigate” or reconcile unfilled orders. In simpler terms, think of it as a crucial level where large traders, banks, hedge funds, or institutions, need to revisit a zone to offset or complete their positions.

Mitigation refers to the market coming back to reconcile (or fill) leftover orders.
A block is typically a small consolidation or a “last up candle” (before a downward move) or a “last down candle” (before an upward move) in some interpretations.

When price returns to this zone, it can provide high-probability trading setups, often reversing the market or propelling it in the original direction. You’ll encounter bearish mitigation block zones in downtrends (or at the onset of a major sell-off) and bullish mitigation block zones in uptrends.

The Role of Supply and Demand in Price Action

Mitigation blocks build on fundamental supply-and-demand concepts. In standard supply-and-demand theory:

Supply zones are areas on the chart where selling pressure outweighs buying pressure, often causing price to drop.
Demand zones are areas where buying pressure dominates, pushing price higher.

A mitigation block refines these broader zones by focusing on the exact candle or zone where institutional orders are left partially unfilled. Price’s subsequent return to that block “mitigates” these unfilled orders, causing the reaction.

Types of Mitigation Blocks

Bullish Mitigation Block

A bullish mitigation block is found in a market environment that is trending upward or preparing to shift from a downtrend to an uptrend. The market forms a zone where institutional buying took place, but not all buy orders were matched. Later, when the price revisits that zone, it reactivates the unfilled buy orders, often fueling the next leg up.

Key characteristics of a bullish mitigation block include:

A last down candle before a rapid move up.
The zone typically acts as support when revisited.
Traders often look for bullish candlestick confirmation (e.g., engulfing candle, pin bar) when price re-enters this block.

Bullish Mitigation Block

Bearish Mitigation Block

A bearish mitigation block typically appears within a downtrend or when the market transitions from an uptrend to a downtrend. The zone reflects an area where institutional sellers established positions before a push down. When price returns, sell orders are filled and the next drop is often initiated.

Key characteristics of a bearish mitigation block include:

A last up candle prior to a strong downward impulse.
The zone generally acts as resistance on retests.
Bearish candlestick signals can appear upon retesting (e.g., shooting star, bearish engulfing) to confirm continuation.

Mitigation Block vs. Breaker Block

Origins in ICT Concepts

The ICT (Inner Circle Trader) methodology has popularized the idea of mitigation blocks and breaker blocks. Both are based on identifying institutional order flow, focusing on where price is likely to turn or continue. While the definitions can overlap in casual conversation, serious practitioners maintain that the two concepts serve different roles in a chart.

Key Differences

Mitigation Block

Represents a zone where unfilled institutional orders remain from a previous move.
The main emphasis is on the “return” of price to fill these leftover orders.
Often the final consolidation candle (or set of candles) before a significant impulse in either direction.

Breaker Block

Forms once a support or resistance level fails, effectively “breaking” the prior structure.
Often the last high (in a downtrend) or last low (in an uptrend) that gets invalidated, turning the previous zone into a new supply or demand area.
Emphasizes breaking key structural points rather than simply mitigating leftover orders.

In short, while a breaker block focuses on a swing point or structural break, a mitigation block highlights a zone that price “must” revisit to reconcile institutional positioning. Both can be used together in a robust price-action strategy, but it’s important to understand their distinct triggers and contexts.

How to Identify Mitigation Blocks

Price Action Clues

The first step in identifying a mitigation block is recognizing impulsive moves. Typically, you’ll look for:

A strong bullish or bearish candle that breaks market structure or pushes price into a new territory.
A consolidation candle or minor pullback just before the impulsive move.
Limited wicks and strong volume (if volume data is available), which can indicate institutional involvement.

Volume and Market Context

Volume can offer an extra layer of confirmation:

In a bullish mitigation block, volume often spikes before the upward move, indicating heavy institutional buying.
In a bearish mitigation block, look for a volume spike ahead of the strong downward push.

Additionally, pay attention to broader market context: major news releases, central bank announcements, or other macro events that might align with institutional trading patterns.

Confirmation Through Market Structure

One of the best ways to confirm a mitigation block is by checking if price has:

Broken a prior support or resistance level.
Respected a higher time frame trend (4H or Daily).
Left behind a “fair value gap” or inefficiency in price.

These elements often accompany or strengthen the significance of a mitigation block, making the level more reliable.

Practical Examples of Mitigation Blocks

Bullish Mitigation Block Example

Scenario: EUR/USD is consolidating near a key support level on the 1-hour chart. Suddenly, it forms a final down candle with a noticeable increase in volume, then breaks upward rapidly by 50 pips, breaching a short-term resistance.

The candle immediately prior to the 50-pip move is your bullish mitigation block.
When price later returns to that candle’s open or mid-level, it reacts bullishly.
Look for a bullish candlestick (e.g., pin bar or engulfing) as confirmation for entries.

This block becomes a prime location for low-risk, high-probability long trades, with stops placed just below the block’s low.

Bearish Mitigation Block Example

Scenario: Gold (XAU/USD) is trending higher but shows signs of exhaustion near a psychological price handle (e.g., $2,000). It prints a final up candle before dropping $30 in a swift move, confirming a new short-term downtrend.

The last up candle before the $30 plunge forms your bearish mitigation block.
When price retraces to that candle’s open (or 50% level), watch for bearish candlestick patterns or a shift in lower time-frame structure.
You can place a stop-loss slightly above the block’s high and aim for continuation downward.

This approach often captures the next wave of selling once institutional orders get reactivated at the block.

Mitigation Block ICT Approach

The Inner Circle Trader (ICT) Framework

Many of the concepts around mitigation blocks come from the ICT framework, which emphasizes:

Institutional order flow
Liquidity pools above/below swing highs and lows
Fair value gaps (FVGs) and imbalances
Precision-based entries around significant candles

ICT traders often overlay additional concepts such as breaker blocks, order blocks, and optimal trade entries to form a robust trading methodology. Within this ecosystem, mitigation blocks act as specialized supply or demand zones that become relevant once the market returns to “fill” or “mitigate” leftover institutional orders.

Incorporating Mitigation Blocks in ICT

In the ICT approach, a trader might identify:

Liquidity Purge: The market hunts liquidity (e.g., stops around previous highs/lows).
Impulse Move: Price makes a rapid move in the opposite direction.
Mitigation Block: The last down or up candle within the impulse.
Return to Mitigate: Price eventually comes back to fill orders.

ICT practitioners often refine entries within these blocks using lower time-frame confirmations (1M or 5M charts) to spot micro shifts in structure.

ICT Kill Zones: Optimal Trading Sessions for Mitigation Blocks

Timing is equally important as price action when trading mitigation blocks. The ICT (Inner Circle Trader) methodology emphasizes that institutional traders operate during specific time windows called "kill zones"—periods of heightened volatility and liquidity where mitigation blocks become most effective. Understanding these strategic time windows can dramatically improve your success rate when trading mitigation block setups.

What Are ICT Kill Zones

ICT kill zones are specific time periods during the trading day when institutional money flow reaches peak activity levels, creating optimal conditions for high-probability trade setups. These aren't simply regular trading sessions—they're concentrated windows within sessions where banks, hedge funds, and institutional traders actively position themselves, generating the volatility and liquidity needed for mitigation blocks to function effectively.

The concept behind kill zones recognizes that the forex market operates 24 hours daily, but not all hours offer equal trading opportunities. By focusing trading activity during these institutional windows, retail traders can align themselves with "smart money" movements rather than fighting against low-liquidity, choppy price action during off-peak hours.

Kill zones differ from standard trading sessions in several key ways. While a trading session might last 8-10 hours (such as the London or New York session), a kill zone represents only 2-3 hours of peak activity within that session. This concentrated timeframe captures when institutional order flow intensifies, making mitigation blocks more likely to hold and produce reliable reactions.

Trading mitigation blocks during kill zones provides several advantages: tighter spreads due to increased liquidity, faster price movements that reach targets quickly, clearer market structure development, and higher probability that institutional orders will indeed be present at the marked zones. When you combine a well-identified mitigation block with the appropriate kill zone timing, you create a powerful confluence that significantly enhances trade quality.

The Four Primary ICT Kill Zones

The ICT framework identifies four main kill zones, each aligned with major financial centers and their corresponding peak activity periods. Understanding each kill zone's unique characteristics helps traders select the most appropriate times for their mitigation block strategies.

Asian Kill Zone (8:00 PM - 10:00 PM EST)

The Asian kill zone represents the opening hours of the Tokyo and Sydney markets, typically occurring from 8:00 PM to 10:00 PM Eastern Standard Time (or 12:00 AM to 2:00 AM GMT). This session exhibits the lowest volatility among the four kill zones, characterized by tight consolidation ranges and relatively muted price movements.

Key Characteristics:

Lowest volatility compared to London and New York sessions
Price frequently consolidates in tight ranges, establishing daily boundaries
Best suited for trading JPY (Japanese Yen), AUD (Australian Dollar), and NZD (New Zealand Dollar) pairs
Often sets up liquidity traps that get exploited during the London session
Ideal for capturing 15-20 pip scalp trades using Optimal Trade Entry (OTE) patterns
Higher timeframe bias tends to guide price action more reliably during this period

Mitigation Block Strategy: During the Asian kill zone, mitigation blocks are less frequently tested compared to later sessions, but when they are, the moves tend to be measured and controlled. Traders should focus on marking key support and resistance levels established during this session, as these often become liquidity pools that London or New York sessions later target. The Asian session essentially "engineers liquidity" on both sides of the market, setting the stage for more aggressive moves in subsequent sessions.

The Asian kill zone works best for patient traders comfortable with lower volatility. While the profit potential per trade may be smaller (typically 15-25 pips), the risk-reward ratios can be favorable due to tight stop-loss placement. Mitigation blocks formed during strong higher timeframe trends often provide reliable entries during Asian hours, particularly when combined with short-term retracement patterns.

Best Currency Pairs: AUD/JPY, NZD/JPY, AUD/NZD, AUD/USD, NZD/USD

London Kill Zone (2:00 AM - 5:00 AM EST)

The London kill zone, running from 2:00 AM to 5:00 AM Eastern Time (7:00 AM to 10:00 AM GMT), represents one of the most critical trading windows in the forex market. This period aligns with the opening of European financial institutions and marks the beginning of significantly increased market activity following the quieter Asian session.

Key Characteristics:

Highest overall liquidity in the forex market
Frequently sets the daily directional bias (establishes daily highs or lows)
Strong tendency to break Asian session ranges and sweep accumulated liquidity
Excellent for trading EUR (Euro) and GBP (British Pound) pairs against the USD
Often produces 30-50+ pip moves in major currency pairs
Price manipulation and liquidity hunts are common as the session opens
Overlaps with the tail end of Asian session, creating liquidity grab opportunities

Mitigation Block Strategy: The London kill zone is arguably the most powerful period for trading mitigation blocks. Institutional traders actively position themselves during these hours, making previously identified mitigation blocks highly likely to hold when tested. Many successful ICT traders consider the London session their primary trading window due to its reliability and strong price movements.

When trading mitigation blocks during the London kill zone, watch for the following pattern: price often sweeps Asian session highs or lows (liquidity grab), quickly reverses direction (market structure shift or change of character), then returns to a mitigation block formed just before the reversal. This sequence represents the classic "smart money" manipulation pattern where retail traders get trapped on the wrong side while institutions position themselves optimally.

The London session frequently establishes the daily high or low, particularly in bullish markets where it tends to set the day's low point, and in bearish markets where it marks the high. This makes bearish mitigation blocks formed near the session's peak or bullish mitigation blocks formed near the session's low particularly valuable, as they often provide entries aligned with the emerging daily bias.

Best Currency Pairs: EUR/USD, GBP/USD, EUR/GBP, GBP/JPY, EUR/CHF

Pro Tip: Focus on mitigation blocks that align with the first hour of the London session (2:00-3:00 AM EST) as this period typically shows the most decisive institutional positioning.

New York Kill Zone (7:00 AM - 10:00 AM EST)

The New York kill zone, spanning 7:00 AM to 10:00 AM Eastern Time (12:00 PM to 3:00 PM GMT), coincides with the opening of the largest economy in the world and creates a second major liquidity surge. This period is particularly significant because it overlaps with the later hours of the London session, creating a convergence of European and American institutional money flow.

Key Characteristics:

Overlaps with London session, producing maximum combined liquidity
Second-highest volatility period after the London open
Often confirms or invalidates the directional bias established during London hours
Heavily influenced by major U.S. economic data releases (typically at 8:30 AM EST)
Excellent for trading all major USD pairs
Can produce 30-40 pip movements in major pairs
Prime time for Optimal Trade Entry (OTE) setups as London positions get refined

Mitigation Block Strategy: The New York kill zone presents unique opportunities for mitigation block trading because price often retraces London session movements during these hours. This retracement frequently brings price back to mitigation blocks formed during the London session, offering high-probability entry opportunities for traders who marked these zones earlier.

A common scenario involves London establishing a directional move (for example, pushing EUR/USD higher), then New York session opening with a pullback that tests a bullish mitigation block formed during the London impulse move. This "London-New York retest" pattern is one of the highest probability setups in the ICT methodology when combined with proper market structure analysis.

The New York kill zone also frequently features liquidity sweeps of London session highs or lows. Institutional traders use these sweeps to position themselves before major economic releases or to accumulate positions ahead of afternoon trading. Mitigation blocks formed immediately after these liquidity sweeps often provide exceptional entry points with tight stop-losses and substantial profit potential.

For indices traders, the New York kill zone is particularly important as U.S. stock markets open at 9:30 AM EST, creating additional volatility. The period between 8:30 AM (economic data releases) and 10:00 AM represents peak opportunity for trading mitigation blocks on indices like S&P 500, NASDAQ 100, and Dow Jones.

Best Currency Pairs: EUR/USD, GBP/USD, USD/JPY, USD/CAD, USD/CHF

Best Indices: S&P 500 (SPX), NASDAQ 100 (NAS100), Dow Jones (US30)

Pro Tip: The 8:30 AM EST economic calendar releases often create initial volatility spikes. Wait for the dust to settle (typically 10-15 minutes), then look for mitigation block retests with the new structural direction.

London Close Kill Zone (10:00 AM - 12:00 PM EST)

The London close kill zone, occurring from 10:00 AM to 12:00 PM Eastern Time (3:00 PM to 5:00 PM GMT), represents the final major trading window as European traders close positions and exit the market. This period often brings profit-taking, position adjustments, and sometimes reversals of earlier session trends.

Key Characteristics:

European institutions close or adjust daily positions
Can produce reversal patterns as London trends exhaust
Lower volatility compared to session opens but still tradeable
Often creates consolidation or range-bound behavior
Good for capturing 15-25 pip quick reversals or continuation plays
Less predictable than other kill zones but valuable for experienced traders

Mitigation Block Strategy: The London close kill zone requires a different approach to mitigation block trading compared to session opens. Rather than looking for aggressive breakouts and large moves, traders should focus on mean reversion setups where price returns to mitigation blocks within the day's established range.

This session works well for traders who missed earlier opportunities during London or New York opens. Price often retraces to key mitigation blocks one final time before the New York afternoon session takes over, providing second-chance entries aligned with the daily bias.

Additionally, the London close can set up swing continuation patterns that extend into New York afternoon hours. If a strong trend developed during London or New York morning sessions, the London close often provides a final retracement to a mitigation block before the trend resumes, offering late-entry opportunities for traders who maintain patience.

Best Currency Pairs: EUR/USD, GBP/USD (though with reduced volatility)

Pro Tip: The London close kill zone is best used by traders who already understand the daily bias established during earlier sessions. Avoid initiating new directional biases during this period.

Steps to Trade Using Mitigation Blocks

Chart Analysis and Marking Key Zones

Identify Trend: Use higher time frames (H4, Daily, or Weekly) to understand macro direction.
Spot Potential Blocks: Scan recent impulsive moves for the final up or down candle before a large shift.
Draw Rectangles: Mark the open-to-close range (or wicks, depending on your preference) of that defining candle.

Entry and Exit Strategies

Entry:
- Wait for price to return to the mitigation block.
- Use a candlestick pattern or a lower-time-frame structure break to confirm the entry.
Stop-Loss Placement:
- Typically just below a bullish mitigation block or above a bearish mitigation block’s high/low.
Target Setting:
- Aim for logical levels: recent swing highs/lows, imbalances, or next supply/demand zones.

Risk Management

Like any technical tool, mitigation blocks do not guarantee a win. Proper risk management is crucial:

Risk small (1-2% of account equity per trade).
Avoid high-impact news trading if you can’t manage potential slippage.
Use a break-even strategy once the trade moves in your favor by a certain margin.

Read More: Why is risk management important?

Case Study: Real-World Usage of Mitigation Blocks

Forex Market Example

Imagine the GBP/USD on a 4-hour chart during a Bank of England (BoE) rate decision week:

The pair has formed a bearish mitigation block prior to a major drop.
After the BoE statement, GBP/USD retraces back toward that block.
Traders spot the retest and short the market, anticipating the policy stance to continue pressuring GBP.

By incorporating the macro context (hawkish or dovish posture) with the technical zone, traders refine their entry points, frequently boosting risk-to-reward ratios.

Equities Market Example

Consider Apple (AAPL) shares listed on the NASDAQ:

AAPL experiences a final up candle on the daily chart before a major gap down on earnings data, leaving a bearish mitigation block.
Weeks later, the stock recovers, heading back into the block.
Observing retail traders flooding in, institutions may use that block to re-add short positions, expecting another sell-off.

By waiting for price to test the block and watching for clear signs of rejection, investors can consider short positions with well-defined stops, staying aligned with broader negative fundamentals.

Common Mistakes and Pitfalls

Forgetting Higher Time Frames: Many traders zoom in too much on lower time frames, overlooking the broader trend or key monthly/weekly levels. Always align your mitigation block analysis with bigger-picture context.
Not Checking for Confluence: Mitigation blocks are stronger when combined with other factors, like market structure, moving averages, or significant pivot points.
Mislabeling a Regular Consolidation Candle as a Mitigation Block: Ensure the candle you label actually precedes a meaningful impulse that breaks structure. A small consolidation in a sideways market may not be a valid block.
Overtrading: Some traders see a mitigation block everywhere and take multiple low-quality trades. Patience and strict filtering are essential.

Advanced Tips and Techniques

What Are Mitigation Blocks

Combining Mitigation Blocks with Other Indicators

While mitigation blocks alone can be powerful, advanced traders frequently blend them with:

Moving Averages (MA/EMA): A 50 or 200-period MA can help confirm the overall trend.
Fibonacci Retracements: Checking if the mitigation block aligns with 61.8% or 50% pullback levels.
Volume Profile or Volume-at-Price: Pinpointing high-volume nodes near the block for additional validation.

Explore our article about What Are EMAs? Definition and Calculation.

Aligning Mitigation Blocks with Fundamental Drivers

Price action often syncs with macroeconomic shifts. For instance:

Interest rate decisions can catalyze major moves that form strong blocks.
Earnings reports or guidance can cause equity prices to surge or plunge.
Geopolitical news sometimes leads to abrupt market swings.

If a bullish mitigation block appears amid upbeat economic data or corporate earnings, that confluence can heighten your probability of a successful trade.

Forex Inducement: Enhancing Trading Opportunities

Forex trading is often influenced by various market inducements, factors that motivate and guide traders’ decisions. In this context, inducement in forex refers not only to the incentive programs offered by brokers or educational webinars that enhance trading skills but also to natural market drivers like economic announcements and institutional sentiment that can create advantageous entry points. By understanding these inducements, traders can better align their strategies with broader market trends. Incorporating inducement in forex into your strategy means recognizing and capitalizing on these signals to improve your timing, boost confidence, and ultimately enhance your trading performance. As always, it is crucial to balance these opportunities with robust risk management practices.

Read More: How to Mark Inducement in Trading?

Conclusion

Mitigation blocks offer a nuanced way to read price action, helping traders pinpoint high-probability entries where institutional orders may be left unfilled. By focusing on these unique supply and demand zones, characterized by a final up or down candle before an impulsive move, traders can structure more precise trades, often with tighter stops and clearer targets.

Key Takeaways

What Is a Mitigation Block? A price zone representing leftover institutional orders that the market must revisit to mitigate or fill.
Bullish vs. Bearish: Bullish blocks support upward movements when retested; bearish blocks resist price on retests, often triggering downward moves.
Mitigation Block vs. Breaker Block: Both revolve around institutional order flow, but breaker blocks hinge more on structural breaks, whereas mitigation blocks center on re-filling orders.
Identifying a Mitigation Block: Look for a final consolidation candle preceding a sharp, impulsive move, often coupled with notable volume.
Mitigation Block ICT: The Inner Circle Trader framework popularizes these blocks alongside breaker blocks, fair value gaps, and other price-action nuances.
Risk Management: Always use stop-loss orders, avoid over-leveraging, and confirm your trade ideas across multiple time frames.

Mastering mitigation blocks can significantly enhance your technical analysis and refine your trade entries. However, there’s always more to learn in the world of advanced trading. For further education and hands-on tutorials, visit the Eplanet Brokers Academy Page, a resource dedicated to helping traders expand their market knowledge and hone their strategies.

By integrating these concepts into a consistent trading plan, backed by both technical insights and robust risk management, you’ll be better positioned to spot high-quality opportunities and navigate market volatility with confidence.