Fair Value Gap | #ICT 🧵

How to utilize FVG properly:

FVG | Explained

Identified by noting the body of a candle stick which has not been violated by the previous and following wicks

Acts as an imbalanced area where inefficient price action takes place and can be used as both entries on retracements or targets as a draw on price

Many are drawn to FVG as they are a simple concept at face value, however not all hold the same amount of significance

Understand that FVG are simply a vehicle to get entries on a trade, ONLY when external factors line up with the context of its placement
Market Structure

Entries within a FVG must be in confluence with the current structure of the market

When market structure holds bullish, watch entries on the long side. When market structure holds bearish, watch entries on the short side
Draw on Liquidity

Avoid going long in a FVG before sellside liquidity is ran and avoid going short before buyside liquidity is ran

Price is meant to deliver liquidity in order for positions to be unloaded. Noting where liquidity is purged hints at directional price delivery
Premium | Discount

The market is always seeking discounted prices. Any FVG which is trading within a premium on the long or short side are not considered for entries

Market makers are entering their positions cheap and so should you
Rebalancing | Failed Price Swing

Imagine imbalances in price as gap fills in equity markets. Price is constantly looking to fill or “rebalance” existing FVG

Watch for price to rebalance a FVG, but fail to break structure. This is a signal that price wants to seek continuation
Complete Setup

Once you identify each element, you will have narrowed multiple fair value gaps within a trading range to a single one which holds the significance on price

Check off each step and find your entries hold greater value
Part 1 - Extension of this thread: https://twitter.com/_amtrades/status/1532139297691815937
Comments are open below for any questions left unanswered!

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