@pipsgravity: What is the Fair Value Gap? Fair Value Gaps are price jumps caused by imbalanced buying and selling pressures. These gaps are sometimes called Price Value Gaps, or Singles, and you may also encounter the term imbalance. In this article, we will use the term Fair Value Gap (also referred to as FVG). Fair Value Gap indicates a market situation where the supply of buyers is significantly higher or lower than the demand of sellers. This can cause the price of an instrument to move quickly towards higher supply or lower demand. The Fair Value Gap then shows the point in the chart where this rapid price movement occurred. FVGs can be seen on charts as large candles that are not completely covered by the wicks of adjacent candles. The FVG formation consists of three candles and there are bullish and bearish FVGs. A bullish Fair Value Gap is created when there is a gap between the high of the first candle and the low of the third candle. A bearish Fair Value Gap is created when there is a gap between the low of the first candle and the high of the third candle. Fair Value Gaps represent a kind of anomaly, an imbalance in the market, a situation where the price has deviated from fair value. And since the market tends to return to fair value, it is possible to take advantage of this fact. When does the Fair Value Gap form? The situation where the market price deviates from the normal value, thus creating a Fair Value Gap, is not accidental. Therefore, below we describe the scenarios in which a FVG can be expected to form. Important events The publication of corporate economic results Large institutional deals How to Trade the Fair Value Gap Because these gaps represent an imbalance, Fair Value Gaps often fill up. Filling the gap With this strategy, it is important to determine what the current trend is. This should be determined on a higher time frame, such as weekly, daily, or H4. A healthy uptrend produces a higher high (HH) and higher low (HL), while a downtrend produces a lower high (LH) and lower low (LL). If the HH breaks in an uptrend or the LL breaks in a downtrend, a break of structure (BOS) is formed and the trend is likely to continue. If a break of HL occurs in an uptrend to the downside, a change of character (CHOCH) occurs and the chance that the uptrend could reverse and start to decline increases. In a downtrend, the analogy is then reversed, i.e. when a break of the lower high (LH) to the upside increases the chance that the market decline could stop and the market could start to rise. If the break occurs such that the break line is not inside the gap, the situation is less reliable for the gap to act as support (uptrend) or resistance (downtrend). The idea is that the break of support or resistance should be inside the FVG, which has a visibly longer middle candle than the surrounding candles. These breaks indicate that they were made with impulsive force and tend to be more reliable. Therefore, it is preferable to focus on these situations. What are the advantages and disadvantages of FVG? Advantages: If a trader can trade FVG, he can achieve a good risk/reward ratio. FVG can be easily identified in a chart. This strategy can be used on a wide range of assets, including stocks, commodities and currencies. It works on all time frames. Disadvantages: Sometimes gaps don't fill and can get "overshot”. This can cause uncertainty. FVGs represent a form of liquidity collected by smart money. Therefore, sometimes the price can go far against the direction of the gap. #forextradingstrategy #tradingforex #howtotrade #howtotradeforex #forextrading #forexstrategy #forextrader #tradingstrategy #marketstructure #fairvaluegap #buysideliquidity #sellsideliquidity #howtostartforextrading #forextradingforbeginners #ict #smartmoneyconcepts #orderblocks #priceaction #bestforextradingstrategy trading setup for beginners best trading timeframes for beginners fair value gap indicator timeframe for day trading balanced price range trading fair value gap explained

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Monday 05 August 2024 12:50:27 GMT