Imbalance aka FVG in trading
To identify the correct Fair Value Gaps (FVGs) and imbalances for drawing a valid Demand Zone , you need to look for specific structural clues on your chart. [ 1 ] Core Criteria for Demand FVGs Three-Candle Pattern : The imbalance must exist between Candle 1's high and Candle 3's low in a bullish sequence. Expansion Candle : Candle 2 must be a large, aggressive bullish candle showing strong institutional buying. Unmitigated Gap : The price must not have returned to fill the space between Candle 1 and Candle 3 yet. [ 1 , 2 , 3 ] How to Filter for the Best FVGs Market Structure Shift (MSS) : Only look for FVGs that occur right as price breaks a recent swing high. [ 1 ] Discount Pricing : Apply a Fibonacci retracement tool from the swing low to the swing high. Only trade FVGs located below the 50% equilibrium level. [ 1 , 2 , 3 ] Order Block Alignment : The highest-probability FVGs rest directly above or inside a bullish Order Block (the last down-close candle before the mo...