A Beginners Introduction To:
Fair Value Gaps (The Most Important PD Array)
A Thread🧵
Fair Value Gaps (The Most Important PD Array)
A Thread🧵
How do you identify a FVG?
1⃣ 3 candle pattern.
2⃣Area where wick of 1st and 3rd candle dont overlap.
3⃣Price is fractal, meaning you can find this on every timeframe.
1⃣ 3 candle pattern.
2⃣Area where wick of 1st and 3rd candle dont overlap.
3⃣Price is fractal, meaning you can find this on every timeframe.
There are 2 classifications of a FVG:
1⃣BISI (Buyside Imbalance Sellside Inefficiency)
In simpler terms: A Bullish FVG🐂
1⃣BISI (Buyside Imbalance Sellside Inefficiency)
In simpler terms: A Bullish FVG🐂
There are 2 classifications of a FVG:
2⃣SIBI (Sellside Imbalance Buyside Inefficiency)
In simpler terms: A Bearish FVG🐻
2⃣SIBI (Sellside Imbalance Buyside Inefficiency)
In simpler terms: A Bearish FVG🐻
Why is it called a FVG?
How to use FVGs?
🔹If the higher timeframe is bullish, FVGs are expected to hold as support and can be used as entries to go long
🔹If the higher timeframe is bearish, FVGs are expected to hold as resistance and can be used as entries to go short
🔺This all of course is dependent on correct timeframe alignment and TIME
🔺You see... not all FVGs will work and not all FVGs are created equal
🔺It goes MUCH deeper than this. But for the sake of keeping things simple today lets continue
🔹If the higher timeframe is bullish, FVGs are expected to hold as support and can be used as entries to go long
🔹If the higher timeframe is bearish, FVGs are expected to hold as resistance and can be used as entries to go short
🔺This all of course is dependent on correct timeframe alignment and TIME
🔺You see... not all FVGs will work and not all FVGs are created equal
🔺It goes MUCH deeper than this. But for the sake of keeping things simple today lets continue
Where to enter in a FVG?
1⃣ The FVG high (reverse for bearish FVG)
Pros: Best likelihood of getting filled
Cons: Lower RR
2⃣The FVG midpoint (Consequent Encroachment)
Pros: Increased RR
Cons: Risk not getting filled
Stop Loss Placement:
Aggressive: 2nd candle low
Moderate: OB body low
Safest: Recent swing low
1⃣ The FVG high (reverse for bearish FVG)
Pros: Best likelihood of getting filled
Cons: Lower RR
2⃣The FVG midpoint (Consequent Encroachment)
Pros: Increased RR
Cons: Risk not getting filled
Stop Loss Placement:
Aggressive: 2nd candle low
Moderate: OB body low
Safest: Recent swing low
When are FVGs Invalidated?
1⃣Candle close below C.E is an EARLY indication of invalidation. Its a warning ⚠️
2⃣Candle closure below a FVG is invalidation ❌
1⃣Candle close below C.E is an EARLY indication of invalidation. Its a warning ⚠️
2⃣Candle closure below a FVG is invalidation ❌
When will a FVG likely not get filled?
1⃣Failure to close above 2nd candles high = FVG below likely to get traded to 🧲
2⃣Closure above 2nd candles high = FVG unlikely to get traded to prior to the draw on liquidity being reached ❌
This is what is known as a Breakaway Gap.
1⃣Failure to close above 2nd candles high = FVG below likely to get traded to 🧲
2⃣Closure above 2nd candles high = FVG unlikely to get traded to prior to the draw on liquidity being reached ❌
This is what is known as a Breakaway Gap.
Now that you know all the basics, what I recommend for you to do next is:
1⃣ Backtest this on your own charts and see for yourself how price reacts at these levels
2⃣Watch my video on IRL/ERL (The Keys to Bias) to unlock a whole new way of viewing price
3⃣Join my free discord, and we'll take care of you from there💚
Link: discord.gg
1⃣ Backtest this on your own charts and see for yourself how price reacts at these levels
2⃣Watch my video on IRL/ERL (The Keys to Bias) to unlock a whole new way of viewing price
3⃣Join my free discord, and we'll take care of you from there💚
Link: discord.gg
Thanks for reading till the end💚
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