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Fair Value Gaps Part 1

Fair Value Gaps Part 1Lesson 7 of 85 min read

The whole sequence

Where the gap sits in the chain you have been building: level taken, close beyond, trend, gap, fill, then the trigger.

Every piece you have learned so far belongs in one order. The gap is the fifth piece, not a separate method.

The chain

Six steps, and each one has to happen before the next.

  1. A level is taken, so the orders resting there are filled.
  2. A candle closes beyond the most recent swing, which confirms the direction.
  3. Price runs in that direction and a trend forms.
  4. That run leaves a fair value gap behind it.
  5. Price pulls back and fills the gap.
  6. On a lower timeframe, a candle closes beyond the most recent swing again.

Step six is the trigger. Placing the trade after it is the next part of this topic.

Figure 1 · Gold: a wick below 2,396 marked as the level taken, a candle closing above 2,404, the rise to 2,431 leaving the 2,404 to 2,412 range shaded, and the pullback filling it

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