🧵 | It’s time for another prerequisite, and most of you are probably already familiar with this as well.
Points of Interest
There is a large set that falls under this category, but we’re only going to focus on the following:
- Gaps / Imbalances
- Orderblocks
- Breaker Blocks
Points of Interest
There is a large set that falls under this category, but we’re only going to focus on the following:
- Gaps / Imbalances
- Orderblocks
- Breaker Blocks
Before we dive into the phenomena around the Point of Interest, let’s first give a straightforward definition:
They are waypoints within a Trajectory.
This definition is a bit different than what most people define them as, but I’ve deconstructed them into something simple.
They are waypoints within a Trajectory.
This definition is a bit different than what most people define them as, but I’ve deconstructed them into something simple.
Mechanically, each Point of Interest is describing a different event that is occurring on Lower Timeframes.
These events are initiated by Liquidity Providers as a means of pairing orders, driving sentiment, and piggybacking off predefined Market-Maker trajectories.
These events are initiated by Liquidity Providers as a means of pairing orders, driving sentiment, and piggybacking off predefined Market-Maker trajectories.
Gaps / Imbalances:
Gaps, as most people know, are empty spaces in Price-Action where Price seems to deviate from its prior structure.
When a candle closes, the open of the next should be relatively nearby.
However, Gaps jump above or below their closing price, leaving a void.
Gaps, as most people know, are empty spaces in Price-Action where Price seems to deviate from its prior structure.
When a candle closes, the open of the next should be relatively nearby.
However, Gaps jump above or below their closing price, leaving a void.
Gaps are simply voids of Liquidity - there is little to none present.
Gaps are rarely found in markets like Futures or Forex, but they are largely present in Equities due to Trading only being allowed at certain times of the Day.
Think of Gaps as “Aftermarket Sentiment”.
Gaps are rarely found in markets like Futures or Forex, but they are largely present in Equities due to Trading only being allowed at certain times of the Day.
Think of Gaps as “Aftermarket Sentiment”.
In Equities, Gaps can appear every single day after the Daily Close once the market opens.
In Forex or Futures, Gaps will primarily take place at the beginning of Trading on Sunday after the Weekend Close.
These are all due to orders being placed during a closed session.
In Forex or Futures, Gaps will primarily take place at the beginning of Trading on Sunday after the Weekend Close.
These are all due to orders being placed during a closed session.
Next, we have the Imbalance.
There are two types of Imbalances:
- Price Imbalance (Fair-Value Gap)
- Volume Imbalance
Volume Imbalance are very similar to Gaps, the only difference between the two is that Wicks are present in Volume Imbalances and can occur far more frequently.
There are two types of Imbalances:
- Price Imbalance (Fair-Value Gap)
- Volume Imbalance
Volume Imbalance are very similar to Gaps, the only difference between the two is that Wicks are present in Volume Imbalances and can occur far more frequently.
The Volume Imbalance is showing that between those two bodies where the wicks meet, Price was delivered inefficiently and it was not offered to the marketplace effectively between those two points.
In terms of the Price Imbalance, these are what you will find 90%+ of the time…
Here, Price was only offered and efficiently delivered to one side of the market (heavy sentiment), which creates an “Imbalanced” range of Price-Action that must be corrected in the future.
Here, Price was only offered and efficiently delivered to one side of the market (heavy sentiment), which creates an “Imbalanced” range of Price-Action that must be corrected in the future.
Each of these three types of Imbalances have the same definition:
They are imbalanced deliveries of Price-Action in a one-sided direction that must be corrected at some point in the future.
They can all be looked at and treated in the same exact manner.
They are imbalanced deliveries of Price-Action in a one-sided direction that must be corrected at some point in the future.
They can all be looked at and treated in the same exact manner.
Next, we have the Orderblock.
These are a bit more tricky to internalize, and it will definitely take more Research than my thread alone, as this is only a Summary…
Orderblocks are the footprints of a HFT strategy known as “Momentum Ignition”.
These are a bit more tricky to internalize, and it will definitely take more Research than my thread alone, as this is only a Summary…
Orderblocks are the footprints of a HFT strategy known as “Momentum Ignition”.
I’ve broken this down in a prior thread, but to put it simply:
Market-Makers possess information pertaining to future trajectories of Price.
Liquidity Providers look for those footprints through “Exploratory Trading”.
They then initiate Momentum Ignition in Participants.
Market-Makers possess information pertaining to future trajectories of Price.
Liquidity Providers look for those footprints through “Exploratory Trading”.
They then initiate Momentum Ignition in Participants.
An Orderblock is basically a Fractal piece of Price Formation.
Price sweeps Liquidity, followed by Expansion in the opposite direction above/below the prior candle.
If Price is in an Uptrend, it retraces. takes Liquidity, and expands back into the trend - that’s an Orderblock
Price sweeps Liquidity, followed by Expansion in the opposite direction above/below the prior candle.
If Price is in an Uptrend, it retraces. takes Liquidity, and expands back into the trend - that’s an Orderblock
It’s important to always take In account the Higher-Timeframe Trend + Liquidity.
This isn’t Supply & Demand. You cannot just highlight any Bearish or Bullish candle - there must be Liquidity present.
Like I said, they’re tricky to internalize, so here’s a few examples:
This isn’t Supply & Demand. You cannot just highlight any Bearish or Bullish candle - there must be Liquidity present.
Like I said, they’re tricky to internalize, so here’s a few examples:
Finally, we have the Breaker Block.
Breakers are simply invalidated Orderblocks, that’s the easiest way to look at them and internalize them.
Whenever there is an Orderblock that should have held as Support, it then becomes a Breaker Block and should act as Resistance.
Breakers are simply invalidated Orderblocks, that’s the easiest way to look at them and internalize them.
Whenever there is an Orderblock that should have held as Support, it then becomes a Breaker Block and should act as Resistance.
These are the three main types of Points of Interest.
While there are many others, such as Propulsion, Mitigation, and Vacuum Blocks, I don’t like confusing myself with all the different definitions.
Every type of POI is either a subset of the Imbalance or Orderblock.
While there are many others, such as Propulsion, Mitigation, and Vacuum Blocks, I don’t like confusing myself with all the different definitions.
Every type of POI is either a subset of the Imbalance or Orderblock.
As price moves from Internal to External Liquidity, price will utilize each type of Point of Interest as a Waypoint for achieving its target.
There’s a ton more that can be explained about Points of Interests, but my only goal here is to introduce, define, & summarize.
There’s a ton more that can be explained about Points of Interests, but my only goal here is to introduce, define, & summarize.
I highly recommend the following resources for learning more about each Point of Interest and how to best utilize them:
- @I_Am_The_ICT
- @theMMXMtrader
- @TTrades_edu
All of them have great content on this topic and many others, so please research further.
- @I_Am_The_ICT
- @theMMXMtrader
- @TTrades_edu
All of them have great content on this topic and many others, so please research further.
This concludes the second prerequisite in the Framework for projecting Exponentially Expanding Fractals.
The third prerequisite will be delivered within the next few days, so keep notifications on.
The third prerequisite will be delivered within the next few days, so keep notifications on.
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