🧪 My Secret To Fair Value Gaps

Good Morning!

In the bustling world of trading, some secrets elevate the elite from the everyday. This week, we're slicing through market noise with a dive into one of the most powerful concepts in trading: Fair Value Gaps. Are you ready to unlock a higher level of market insight? My latest video unpacks this trend, turning the complex into the accessible.

Let’s get into it 👇

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📈 I Found A Secret To Fair Value Gaps

New Video Alert!

Ever wondered why some traders seem to always be in the right place at the right time?

It's not magic—it's mastery of the market's movements, especially through understanding fair value gaps. Dive into our latest video where we demystify one of the biggest trends in trading right now: fair value gaps.

Why Fair Value Gaps Matter:

Fair value gaps are essential elements in technical trading that occur when the price of an asset moves sharply up or down without significant trading occurring within that range.

This sudden price change creates a 'gap' that is visually evident on price charts as a large candle. These gaps are crucial because they represent areas of market imbalance where the price has moved too quickly for the market to react.

Validating Fair Value Gaps:

Recognizing a valid fair value gap is key to utilizing this phenomenon effectively. A valid gap has not been tested since its creation—meaning the price hasn’t returned to this zone before continuing its trajectory.

This preserves the gap’s potency as a potential pivot point for future price movements.

In the video, I explain the six crucial factors for a fair value gap to be considered valid:

1. Unmitigated Zone: The gap must remain untested post-creation.

2. Candle Reaction: The candle must either close within the gap or continue in the direction of the original gap movement.

3. Support and Resistance: Adding layers like historical support or resistance within the gap can strengthen its significance.

4. Priority of Gaps: Lower gaps in bullish scenarios (and higher in bearish scenarios) generally carry more weight.

5. Tool Utilization: Tools like the Gann box from TradingView help identify and prioritize these gaps effectively.

6. Structural Breaks: A valid gap often follows a structural market break, like surpassing a previous high or low.

Live Trading Example: 

To solidify your understanding, our video includes a real-time trade example. You’ll see how these criteria come together to spot a high-probability trading setup.

This hands-on demonstration will help bridge the gap between theoretical knowledge and practical application, showing you exactly how to implement these strategies in live market conditions.

Make sure you check it out!

✍ TL;DR

• Understanding Fair Value Gaps: Learn what these gaps are and why they're crucial for technical trading.

• Components of a Valid Gap:

  • Unmitigated Zone: The gap must remain untested post-creation.

  • Candle Reaction: The candle should close within the gap or continue the initial gap movement.

  • Support and Resistance: Enhance gap significance with historical support or resistance layers.

  • Priority of Gaps: In bullish scenarios, prioritize lower gaps; in bearish, higher ones.

  • Tool Utilization: Use tools like the Gann box from TradingView for better identification and prioritization.

  • Structural Breaks: Look for gaps following significant structural market changes.

Stay ahead, stay informed, and most importantly, stay profitable.

‘til next time,

TradingLab