foreign 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 um I have had zero hours of sleep um I'm in Miami obviously um 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 [ __ ] to learn and that's what we're here for so with that being said let's just jump right on
into it okay I believe today hold on actually I I don't want to get this wrong I believe today is fair value gaps part two let me double check the the YouTube channel for a second yes let's go okay today is um is identify or sorry fair value gaps part two okay so today we're going to be talking about how we can identify them um and then also you know like showing how you could potentially take a trade or really today's just 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 breaker 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 um 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 I literally I've gone almost like 48 hours with no sleep um 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 um uh what was that 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 liquidity voids what are 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 with that being said right price comes down into that liquidity void into that imbalance into
that for Value Gap where there are no right resisting orders and then we can place more orders but 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 you know take a take uh sorry move the market oh I can't dude I'm sorry um messing up but more 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 in that 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 um a retracement tool essentially it helps you find trades off of retracements and as we start getting deeper into this we'll start explaining you know all that [ __ ] about how you can um how you can you know 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 we see market doing that we are looking for fair value yet 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 for Value gaps for reactions okay and continuations that's essentially what this what fair value gaps and equilibrium are used for it's 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 looks like 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 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 um resistance um resting orders right we see this right and we'll show examples of this on the chart but we see this candle right massive up candle right and no resistance in between and 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 wig to the bottom of the third candle's Wick 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 breaker 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 for 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 in that covering it so for this one for example [Music] sorry this one for example we have boom right from a bearish gap we have it from the bottom of the first candles Wicks to the top of the third candle's Wick like this right we can see boom bottom of this candle's wig to the top of this candle's wig 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 bear's bias what were you looking for we're looking for retracements okay we retrace onto this into this fair value Gap we continue lower this is as easy as it gets this should be one of the easiest Concepts to to use however because it is such a freaking easy concept to use you have to understand that it is it isn't necessarily as 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 Valley Gap right here we have her value Gap right here we have everybody 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 breaker structure see a change in Market structure 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 they're probably got pair if I probably got pair all these are going to work and it's like no they aren't okay they 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 smaller time frame if there's a break of structure make sense
cool um I don't really I'm trying to think what what else we have I mean today's homework you are going to be going on whatever pair you choose right whatever one pair that you're going to be trading on um and you are going to be you are going to be um identifying 10 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 breaker structure the downside we know that price is falling okay yeah we have this fair
value Gap within here right we have this for Valley 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 yeah 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 candle's body and the first and
third candles Wicks do not fill the second candle's body so let's say this is the body if we have Wick from this candle and then Wick from this candle let's just say these are candles okay there we go boom this is not a fair value app why because price already came within here 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 blog look this oh sorry bullish um fair value yep 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 week 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 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 this is
a perfect example this candle this candle is 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 candle's 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 breaking 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 oh man yeah that's pretty much it um I'll see you guys tomorrow for a nice little psychology Zoom um I'm really excited for it peace out um also hopefully I can get some good night's sleep before the next video that goes up tomorrow okay
