RH Trader

Fair Value Gaps: Everything You Need to Know

a thread🧵

Fair Value Gap (FVG) is the only array I use from all the other ones that ICT has taught over the years.

In this thread I will explain everything you need to know and how you can utilize this to improve your read on price action.

Let's get into it.

The three levels in a fair value gap are:

1. Institutional Orderflow Entry Drill
2. Consequent Encroachment
3. FVG Filled

As a beginner, 
without any back-testing experience, you can use IOFED for entries to make sure you don't miss out on the move. 

"Price always draws towards gaps or highs/lows."

The fair value gaps are the easiest to spot and frame your bias on. 
Price is always looking for fair value and these gaps acts as magnets to the algorithm.

This is real support and resistance in the charts. 

Buyside Imbalance, Sellside Inefficiency = Bullish.
Sellside Imbalance, Buyside Inefficiency = Bearish.

Price moves aggressively from key levels and a formation of BISI/SIBI acts as a confirmation in the direction of the market. 

A Balanced Price Range (BPR) is a high probability fair value gap.
This occurs when the SIBI & BISI line up, side by side.

This array acts as a brick wall to price.

Candles are not permitted to close below the discount level of the gap.

The other two forms of gaps that you may notice in the market are: 

- Volume Imbalance (VI)
- Gap

The actual gap acts as the highest form of draw on liquidity to price.💎 

A fair value gap can be considered violated when a candle closes violently below the discount level.

This does not apply to the cases where the gap is being filled and price moves into the orderblock and moves higher. 

To avoid being stopped out I would suggest you place your stops below the recent swing low.

If you learnt something new today and want to see similar content from me, then

like, repost and bookmark it for future reference.