What is good guys welcome, I'm sorry for the late video hopefully some of you guys are still awake if not I'm sorry. This is coming to you guys late I have had zero hours of sleep I'm in Miami obviously, and I'm still going to keep my promise of uploading a video every single day. I wish I could take a nap right now, but I'm not going to let myself do that because you guys have shit to learn, and that's what we're here for.
So, with that being said, being said, let's just jump right on into it, okay? I believe today, hold on, actually, I don't want to get this wrong. I believe today is Fair Value Gaps Part 2. Let me double check the YouTube channel for a second.
Yes, let's go. Okay, today is Fair Value Gaps Part 2. Okay, so today we're going to be talking about how we can identify them and then also showing how you could potentially take a trade or really today's. going to be identifying and then day three is going to be how you can take trades and how you can put it together with liquidity sweep break of structure bing bong boom all that stuff today is literally just going to be identifying them understanding what they're used for doing a little bit recap of that um should be relatively quick should be relatively easy.
So with that being said, let's jump right into it. So we'll first do a quick little summary. Also, please forgive me if I, you know, mess up. Like I literally, I've gone almost like 48 hours with no sleep.
And obviously my voice is gone and I've been doing a bunch of stuff. So if I, if I mess up, bear with me anyways. What was it?
Yeah. Let's, let's jump right into it. Okay.
So first we'll do a quick little recap. What are fair value gaps? What are our liquidity voids, what our imbalances, it's literally where there is a lack of liquidity, meaning there are no resting orders in the opposite, in the opposite direction of wherever price wants to go.
So that being said, right, if price comes down into that liquidity void, into that imbalance, into that fair value gap where there are no right resisting orders, and then we can place more orders, boom, market is going to move and market is going to react. Why? Because there was a lack of liquidity within that area that gives us the opportunity and the ability to... to, you know, take a, take, sorry, move the market.
I can't, dude, I'm sorry. Messing up, but we're focused. All right.
So with that being said, right, we understand that, okay, fair value gaps are essentially a liquidity void within the market where market will probably draw to and then react off of, and that's essentially what it is. It's literally just an imbalance, a liquidity void. Price draws back down into that. Why?
Because there's no resting sell orders, there's no resting buy orders. in the opposite direction of wherever the price is trending, which in turn makes fair value gaps a retracement tool. Essentially, it helps you find trades off of retracements. And as we start getting deeper into this, we'll start explaining all that shit about how you can use these.
But something to note, fair value gaps are not reversals. Fair value gaps are not used for reversals. So if we see market trending higher and higher, if we see market going higher, higher, higher, higher, right, breaking higher highs and higher lows, if we see market doing that... We are looking for fair value gap.
We are looking for bullish fair value gaps. Okay, and we'll talk about where to find them. But in this case, right, we're bullish. So what are we looking for?
We're not looking for bears for value gaps to turn price around. We're looking for retracements into these bullish fair value gaps for reactions. Okay, and continuations.
That's essentially what this what fair value gaps and equilibrium are used for its continuations and Retracements. Okay. So with that being said now, let's talk about how we can identify them fair value gaps are essentially or imbalances are essentially A three candle pattern the first candle. Okay, which This shrink, okay, and then the second candle which is the candle that creates the imbalance essentially Will be like super full like this and then the third candle would which looks a little something like this. Okay.
And a fair value gap looks something like this. Okay, so what is the area of fair value? What is the area that has not been filled, right, that didn't have any, you know, resistance, resting orders, right?
We see this, right, and we'll show examples of this. It's on the chart, but we see this candle, right? Massive up candle, right? And no resistance in between.
And how do we know there's no resistance? Through the wicks, okay? So this is a three candle pattern. And essentially, we find the liquidity void.
We find the, you know... area and price range of fair value by measuring it off of in in for for bullish fair value gaps it's from the top of the first candle's wick to the bottom of the third candle's wick and And then, you know, you draw your box or whatever, your GAN box, your rectangle. You draw it, right, just like that.
Boom, from here up to there. Wait for price to fill. Wait for price to react.
So now my shitty-ass drawings can get removed and we can actually see this happening on the charts. And, you know, like actually see what it looks like. So this is a perfect example.
Okay, we get a break of structure. We're confirmed bullish now. Okay, we know that we're bullish. Okay. What is this?
We have a massive candle with no right look this no wicks, no wicks filling this. So what does that make this a fair value gap, right? There is a liquidity void. What does price do?
Draw into it, chop, chop, chop, break structure, rally. Okay. Perfect example of a value gap getting used. Boom. Bullish.
Right? Bullish for value gap rally. Okay. It's actually very easy to spot these in the market. You literally just look for, you know, areas that do not have, do not have wicks covering it and covering it.
So for this one, for example, Sorry. This one for example, we have boom, right? From a bearish fair value gap, we have it from the bottom of the first candle's wicks to the top of the third candle's wick like this, right?
We can see boom, bottom. of this candle's wick to the top this candle's wick we see price come in chop chop chop fill drop okay right how do we know it's going to be bearish we had a breakup structure right here confirming a bearish bias what were you looking for we're looking for retracement Okay, we retrace on into this fair value gap. We continue lower. This is as easy as it gets.
This should be one of the easiest concepts to use. However, because it is such a freaking easy concept to use, you have to understand that it isn't necessarily... valuable as you may think okay so you you can you can find these literally every single every everywhere on charts right we could you know oh for value gap right here we have for value gap right here we have for value gap Right here, right? And the issue that I have with this is when people execute purely off of just the fair value gap getting hit and without a reaction.
Wait for a reaction or scale down to a lower time frame, see a break of structure, see a change in... a market structured shift or just a reaction like with a bullish candle or a bearish candle, whatever direction you're trying to see it go and let that be your confirmation to enter. Okay.
Be very patient with these because they're all over the chart and it's really easy to get kind of caught up in them and be like, oh, the fire valley gap here, fire valley gap here, all these are going to work. And it's like, no, they aren't. Okay.
Not all of them are going to work. And that's why we have to wait for confirmation. That's why we have to wait to see if there's a reaction. That's why we wait to see on a smaller timeframe if there's a break of structure. Make sense?
Cool. I don't really, I'm trying to think what else we have. I mean, today's homework, you are going to be going on whatever pair you choose, right?
Whatever one pair. pair that you're going to be trading on and you are going to be you are going to be identifying ten fair value gaps within the market and then you know creating kind of like a hypothetical way that you would trade it right so like this we see that break of structure the downside we know that price is falling okay yeah we have this fair value gap within here right we have this fair value gap we see price fill close bearish right here okay perfect. Now we can enter a stop above the previous high target, previous lows, right? Simple as that. But again, we're not even, we're not even at the point of, of being able to execute yet.
We're still putting the pieces together. So that's really all fair value gaps are. And it's, it's a three candle pattern.
The first candle, okay. The first candles wicks do not match or do not fill the second candles body. And the first and third candles wicks do not fill the second candles body so let's say this This is the body.
If we have wick from this candle and then wick from this candle, let's just say these are candlesticks. Okay, there we go. Boom. This is not a fair value gap. Why?
Because price already came within here. It filled the liquidity void. right there's nothing else to do in here and and these wicks show hindering orders these these wicks show resting orders pretty much proving that um you know this pretty much proving that okay there's there's no lack of liquidity here it's been filled so that's something that i want you guys to do as well be able to know where there's no fair value gap is this a fair value gap no why because we're looking for a bullish for value gap we take it from the top wick the top wick of the first candle okay to the bottom wick of the to the bottom wick of the third candle in terms of a bullish order block look this sorry bullish fair value gap look this is this is not a fair value gap because we took it from this the high of this wick down to the low of this wick and nope is not gonna work definitely not gonna work okay so with that being said I understand and know the difference between ones that are not real you know you should easily be able to identify these right we just showed it it perfectly remember it's a three candles pattern we're using the wicks of the first candle along with the third candle and we're using the second candle to pretty much show the imbalance right we have this candle it's a perfect example this candle this candles candle number one we take it from the bottom wick in terms of a bearish fair value gap we take it from the bottom wick right which is right here down to the third candles top wick which is right here okay the second candle is the imbalance Okay, perfect. We see price rally up on in there.
Scale down to the lower time frame. Boom, you see break-up structure, young money militia. That's how we can execute. Okay, so with that being said, get your homework done. Make sure you identify these and then also be able to identify the ones that are not even real.
So you can actually get comfortable with understanding, you know, which ones are right and which ones are wrong Man, yeah, that's pretty much it. I'll see you guys tomorrow for a nice little psychology zoom I'm really excited for it. Peace out Also, hopefully I can get some good night's sleep before the next video that goes up tomorrow. Okay