@itsnathanoreilly: The first bearish candle isn't always the best place to enter a short. In this chart example, price pushes above a previous high, drops sharply and leaves a bearish imbalance behind. The move down looks convincing, but selling after the drop would mean entering when price has already travelled some distance. So what happens if price comes back up? THE AREA TO WATCH After the initial sell-off, a highlighted zone remains above price. In ICT/SMC analysis, traders often watch these fair value gap (FVG) areas as potential locations for a reaction. A bearish FVG is a three-candle imbalance created during a downward move. Some traders monitor the gap for a possible retracement and rejection. But drawing a rectangle on a chart doesn't make it resistance. Price can return to that area, move straight through it or react briefly before continuing higher. WHY THE RETEST MATTERS In the example, price falls away, then rallies back towards the same upper zone. There are also previous highs nearby. That matters because a move above a high can take buy-side liquidity before price reverses, but a liquidity sweep on its own is not a sell signal. The question is whether buyers can maintain the move above the zone or whether price begins to reject it. A bearish reaction at a preidentified area gives a more specific trade hypothesis than chasing the initial drop. WHERE DOES THE IDEA FAIL? Before thinking about a target, we need a price level that would weaken or invalidate the bearish setup. The illustrated short uses a stop-loss area above the recent high and a downside objective. Those levels need to be chosen because they make sense on the chart, not just because the resulting risk-to-reward ratio looks appealing. The completed chart shows a move towards the target. That is an example of how the idea could play out, not evidence that similar trades consistently win. THE TAKEAWAY A sharp bearish move tells us something about immediate momentum. A fair value gap gives us an area to monitor. A retest and the reaction around nearby highs help us assess whether a short is worth considering. Each step answers a different question. None guarantees where price will go next. Follow for more price action, liquidity and fair value gap breakdowns. #FairValueGap #LiquiditySweep #PriceActionTrading #ICTTrading

itsnathanoreilly

Open In TikTok:

Region: IE

Thursday 22 October 2026 13:00:00 GMT