High Probability Fair Value Gaps (FVG) – 2023 MMFunded ICT Mentorship

how's it going everyone this video is going to be about fair value [Music] gaps what is a value gap an imbalance or inefficiency there's multiple terms for a value Gap such as imbalance inefficiency volume imbalance but the most common term is known as a fair value Gap I will also touch on the difference between a fair value Gap a volume imbalance and an inversion Gap firstly let's start off with the basics what is a fair value Gap a fair value Gap is a three Candlestick pattern where the first candle's low does not overlap the third candle's high or where the first candle's high does not overlap the third candle's low let's take a further in-depth look into this if you take the low in an example of a three series candles in a downtrend if you take the low of the first candle and you drag that across and you take the high of the third candle and you drag that across because the third candle's high does not overlap with the third candle's low this Gap gap between the first and the third candle is what you call a fair value gap which often acts as a magnet for price to fulfill before continuing in its direction let's use the example of a three bullish series candles if you drag across the low of the third candle and you drag across the high of the first candle because the high of the first candle does not overlap with the low of the third candle this gap between the first and the third candle is called your fair value Gap now that you understand what a fair value Gap is what does a fair value Gap not look like so in the scenario if we do have a three series of bearish candles but in the scenario let's say the Wicks of the third just going to remove this for now and the first candle are overlapping if I take a horizontal line and drag the high of the first candle across and if I take another line and drag drag the line across the low of the third candle you can see that these two Wicks are overlapping therefore in this scenario there would be no valid fair value Gap similar to a three bullish series of candles I just drag the Wicks across and now if I take the high of the first candle and drag that across and the low of the third candle and drag that across you can see that the high of the first candle and the low of the third candle is now overlapping therefore there would be no valid fair value Gap again just to recap that in the example of a three bearish candle series the gap between the high of the first candle and the gap between the low of the second candle would be your valid fair value Gap and in the example of a three bullish series of candles the high of the first candle and the low of the third candle if they're not overlapping that Gap in between is what you you call your fair value Gap all right so let's take a look at one or two live examples in this example of a three series bearish candles we can have a look at the low of the first candle and the high of the third candle the low of the first candle and the high of the third candle is not overlapping therefore we can mark this out as our valid fair value Gap now if you notice as I play this throughout you will see that price often likes to fulfill these gaps and act as a magnet for price to continue in the expectational Direction all right price fulfills that fair value Gap and continues to Target these weak lows all right and now we get an aggressive move in the same direction so we can look for the previous three series candles we have candle number one candle number two and candle number three the low of the first candle and the high of the third candle acts as another fair value Gap so we can mark that out continue price throughout all right price fulfills that fair value Gap and then violates that fair value Gap if we have to look for the nearest fair value Gap the previous three series candles 1 2 3 1 2 three there is no fair value Gap at the moment price has just fulfilled this fair value Gap if we look at the previous three 1 2 3 the high of the first candle and the low of the third candle is overlapping therefore there is no fair value Gap here and if we backtrack 1 2 3 no valid fair value Gap 1 2 3 no valid fair value Gap 1 2 3 right over here at the high of the first candle and the low of the third candle acts as a valid fair value Gap you'll see over here price already Wicked This fair value Gap but didn't fulfill all of it so therefore in this scenario if price just Wicks the entry of a fair value Gap it is 100% valid to move that fair value Gap to that next Wick as this Gap still acts as a valid fair value Gap okay so let's highlight this as of our FEG let's play price throughout and see what happens okay price Wicked that fair value Gap reacted and is now continuing in the same direction all right let's continue this through Candle One 2 three right over here the high of the first candle the low of the third candle is a valid fair value Gap let's continue all right violation of that fair value Gap all right all right price fails that fair value Gap let's continue this through until we see a clear fair value Gap all right over here in this three series bullish candles candles 1 two and three we take the high of the first candle the low of the third candle and we can mark this out as our valid fa value Gap as these Wicks are not overlapping price mitigates that fair value Gap and continues in the expectational direction let's continue this okay so over here is a good example of candle number one two and three the high of the first candle is overlapping with the low of the third candle therefore or there is no fair value Gap okay candle number one two and three we can take the low of the first candle the high of the third candle these Wicks are not overlapping therefore we can mark this art as our valid fa value Gap okay we have another valid fa value Gap candle number one two and three the low of the first candle and the high of the third candle we can mark this out as a valid fair value Gap all right mitigation and continuing in the expectational direction right over here candle 1 2 3 no valid F value Gap as the low of this candle is overlapping with the high of the third candle so we can continue this throughout right further mitigation into that fa valy Gap mitigation into the extreme fair value Gap reaction and we formed a new fair value Gap Candle One 2 and three we can Mark out the low of that first candle the high of the third candle those Wicks are not overlapping and we can mark this out as a valid F value Gap all right mitigation and violation and we have now formed candle 1 2 and three a new bullish fair value Gap so we can Mark out the high of the first candle the low of the third candle and Mark this out as a valid fair value Gap as those Wicks are not overlapping okay price didn't pull back into that F value Gap and we continued in the expectational direction right over here from the high of the first candle to the low of the third candle candle 1 2 and three and this is where live price is today so what we can potentially expect on Euro USD is after this break of structure potentially a bit of a pullback later today in this fair value Gap to continue long and once you start understanding the power of fair value gaps liquidity Concepts and your structural context of the market you can start to formulate a very powerful system for yourself okay so let's go over one or two things that we would like to see price do as price is entering a fair value Gap my favorite scenario for a fair value Gap is a liquidity sweep into that fa value Gap so over here right now as price lies what I would like to see is price pull back have a bit of a reaction creating liquidity to form Above This fair value Gap so I'm going to mark this out as a sweep this often adds as good Confluence and fuel for this fair value Gap to hold to sweep this low further into this Gap to then look for an entry confirmation such as a displacement with a lower time frame value Gap to go long to continue targeting these weak highs one thing that I want you to take note of and that you will learn throughout any of the content that you watch of mine every single point of Interest area of value whether that's a supply or demand zone or whether that's a fair value Gap there needs to be resting liquidity above or below that specific POI in order to make it more valuable and the probability of that specific POI which trans for point of interest to hold and to continue in the direction that you expect in this example that we marked out earlier from the first candle's low to the third candle's High we have a valid fa value Gap as these candles are not overlapping the good probability of this fair value Gap holding is if price mitigates this fair value Gap and candle closes below this fair value Gap okay just going to quickly draw this out we want to see this candle body close after the wick mitigation into this fa Val Gap react and close this is what we call this is what we call the consequent enrollment this is what we call the consequent enrollment which is a good probability that this fair value Gap is going to hold if price mitigates this fair value Gap forms a body closure Above This fa valy Gap let me just quickly Mark out the Wicks of this candle all right so we've had price pull back mitigate and close candle body closure Above This fair value Gap this is what we call an inversion Gap where price often likes to pull back retest this old fair value Gap and continue in the expectational direction so these are two things that I want you to make notes of a good probability fair value Gap is a body closure below a bearish example such as so which will then be good probability that price will continue in the expectational direction Point number two is if price closes candle body closure in the opposite direction so for example above in this bearish example this fair value Gap will now act as an inversion Gap where price often likes to pull back referall this Gap and continue in the expectational direction okay so let's go over a lower time frame example right over here we have a valid 4our fair value Gap as these candles on the low of the first candle is not overlapping with the high of the third candle we can then hop over to a lower time frame so from the 4H hour I mechanically go over to the M15 time frame we do have valid resting liquidity Above This fair value gap which we want to see get swept into that our time frame fair value Gap okay as we play price throughout we've had the sweep of that liquidity mitigation of that fair value Gap reaction and we've now printed a lower time frame fair value Gap displacement inside of the higher time frame 4H hour fair value gap which can often act as confirmation to continue your trade and where price is going to go from there okay so if we take candle number one two and three we Mark out the low of the first candle and the high of the third candle this becomes our valid lower time frame fair value Gap okay so as I set a limit order on this Gap stop above the candle's High let's say we're targeting a mechanical 1 to3 risk to reward if you look at your higher time frame structure understanding that these lows are weak the expectational order flow is actually to Target these weak lows all right so let's continue okay SL mitigation of that fa value Gap and fulfillment of that Gap and price now continuing in the expectational direction and price is not targeted those 4-Hour week lows and if we have a look at the higher time frame you will see that price mitigated this fair value Gap and the candle body then closed below this fair value Gap and opened up this new candle over here which again was good probability that price is going to continue in the expectational Direction all right so let's have a look at an example of an inversion Gap right over here we have a series of three bearish candles 1 two and three we can Mark out the low of the first candle and the high of the third candle which makes 100% valid fair value Gap let's continue price and see how price reacts to this Gap okay so over here we had Mitigation Of This fair value Gap price then closed the candle body above the fair value Gap so what can we expect expect it's a bit of a pullback and price to continue all right there's that pullback the mitigation of the fair value Gap turned inversion Gap to continue in that direction price busy fulfilling that Gap again and continuing in the expectational direction from there so let's continue this through and have a look at some more examples of an inversion Gap keep in mind we still have this old fa value Gap from earlier which from this candle's low to this candle's High has not been mitigated until over here however the fair value Gap has not been mitigated fully so therefore in this example we can continue this up through these highs over here now we've swept buy side liquidity into this fair value Gap let's have a look at how price reacts okay price closes candle body below so good probability that this fair value Gap will have some kind of bearish reaction all right we get that bearish reaction then the the failure of that fair value Gap so we can now drag this across this old fair value Gap now becomes an inversion Gap so what we can expect is a bit of a pullback to then continue in the expectational direction from then which at the moment where price is currently lying also understanding why this fair value Gap didn't hold is because most recently we had this break of structure to the upside strong protected lows this was a weak exposed high so the expectational order flow is to Target these weak highs so instead of looking for bearish fair value gaps to go short we want to look for bullish fair value gaps or inversion gaps to rather go long we had a beautiful example of a bearish fair value Gap fail and act as an inversion Gap to continue targeting these expectational weak highs okay so let's take a look at an example of a volume imbalance Gap in this example you'll see between these 1 2 and three Candles there is a clear skip in price from the first candle's low to the third candle's High that has not been fulfilled at all there is no candle action and price action that has occurred in this area of price which often price acts as a magnet to reul rebalance and recorrect price in this example of such a large volume imbalance Gap it would also be valid to Mark out the 50% so what will most likely happen is price will pull back for full areas of this volume imbalance Gap to continue targeting potential lower down bullish Fair Valley gaps over here as your target so let's see what happens all right price pulling back busy filling that volume imbalance Gap also mitigated the 50% and take note of how after we've mitigated that 50% we produced another confirmation of a candle one 2 and three the low of that candle the low of the first candle and the high of the first candle is not overlapping we've had that displacement with Fair valy gap which is good confirmation that this overall volume imbalance Gap is going to hold so we can expect price to mitigate this and continue short from there let's see what happens all right mitig a of that displacement fa value Gap inside of the larger volume imbalance Gap continue price okay take a look at this example over here here is another example of a volume imbalance Gap at the low of the first candle's body and the high of the second candle's body we have a complete skip in price yes the Wicks are overlapping but the bodies are not overlapping same thing over here as well the gaps between these two candle's body has been skipped in price so price often acts as a magnet to this area to reul full rebalance price to continue in the direction from there so what can we expect here is a pull back into this volume imbalance to continue short let's have a look at what happens okay so in this example price ran without it but what we can expect later on is still for price to refill and rebalance price in this area so let's continue through price and see what happens okay in this example price just having a bit of a pullback mitigating this overall fair value Gap and also reuling this volume imbalance Gap to continue short from there all right as price is starting to mitigate these higher time frame fair value gaps we can start to look for displacement fair value Gap entry confirmation all right mitigation of that bullish fair value Gap we've now printed a new fair value Gap with a displacement candle 1 2 and three especially after the sweep of this salside liquidity so what can we expect price to do is to pull back into this area of fair value Gap to continue long from there okay mitigation of that Gap price continuing in the expectational direction from there to potentially fulfill these older areas of volume imbalance okay and price is now fulfilled that volume imbalance price busy reacting off of this older fair value Gap over here so we can expect price to continue continue reacting of this larger fair value Gap to continue higher okay and price busy targeting those expectational week highs I hope you guys have a better understanding of fair value gaps volume imbalance gaps and inversion gaps without further Ado take care and I'll see you in the next video of this mm funded ICT boot camp

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