Imbalances
Market Inefficiencies
Imbalances—most commonly known as Fair Value Gaps (FVG)—occur when buying or selling pressure is so intense that price "skips" levels, leaving behind unfilled orders.
These gaps act as:
Magnets: Price often returns to "fill" or "rebalance" the gap.
Support/Resistance: Once filled, the zone often triggers a reversal.
Gap Types Explained
1. Fair Value Gap (FVG)
The most fundamental imbalance pattern.
Structure: A 3-candle sequence where the wicks of candle 1 and candle 3 do not overlap. The space between them is the gap.
Usage: Wait for price to tap into the FVG (often the 50% level) for a high-probability entry.
2. Inversion FVG (IFVG)
An FVG that has "flipped" its polarity.
Scenario: Price smashes through a Bullish FVG without stopping.
Result: That failed Support zone now becomes Resistance. We automatically label this as a Bearish Inversion FVG.
Power: These are exceptionally strong signals for trend reversals or continuations.
3. Volume Imbalance (VI)
A gap formed by the difference between the Close of one candle and the Open of the next.
Context: Often seen in low-liquidity environments or during high-volatility news events.
4. Opening Gap (OG)
The jump between yesterday's market Close and today's market Open.
Context: Critical for Daily bias. If price opens huge gap up, the OG often acts as support for the day.
5. Balanced Price Range (BPR)
A complex pattern where a Bullish FVG and a Bearish FVG overlap.
Meaning: The market has aggressively bought up and then sold down through the same price area. It represents a "knot" of equilibrium that price respects highly.
Volume & Strength
Not all imbalances are powerful. We use volume analysis to grade them for you:
💪 Strong: The imbalance was formed with high relative volume. Probability of holding: High.
⚖️ Balanced: The imbalance had average volume. Probability of holding: Medium.
🥀 Weak: The imbalance had low volume. Probability of holding: Low. Use with caution.
Displacement
Displacement serves as a critical filter for identifying high-probability setups. It refers to the energetic price movement that often precedes the creation of an imbalance, signaling institutional intent.
Usage: Look for the colored bars (Displacement candles) on your chart. When an FVG is formed by one of these candles, it carries significantly more weight than a standard FVG. These are the zones you should prioritize for potential entries.
Value:
Confirmation: Validates that "Smart Money" is participating in the move.
Filtering: Helps you avoid false signals in choppy or ranging markets by focusing only on moves with real conviction.
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