fair value gaps are amazing but in some cases when trying to read a lot of fair value gaps at the same time it can be quite overwhelming now to fix this we can focus on two candle rejection I and others got funded using two candle rejection now with two candle rejection we know exactly if the next candle should continue higher or lower but it won't work if we don't understand the PD Rays PD rays are at the foundation of everything that we do because we're always moving towards and from PD rays now for this video
we are going to focus on Fair Value gaps and swing points so swing highs and swing lows as our PD Ray now if we are expecting higher prices a bullish Trend in the market then premium arrays will be disrespected and discount arrays will be respected and then from those discount arrays in a bullish Trend it's important to understand that the objective of price action is to create a new fair value Gap as soon as possible so right here we said it all starts with those spe Rays we have this fair value Gap that we can
continue higher from now this fair value Gap is on the daily time frame the usual reaction or what people do is go into the lower time frame right here let's take the 1 hour as example to then look at fair value gaps to continue higher from right here on the 1 hour if you take these fair value gaps right here and you go up a time frame again so we go back to the Daily time frame then what do we see those fair value gaps on the 1 hour time frame they turn into One Singular
candle when you go up in time frames now this is what we know as candle signs how one candle equals F gaps and F gaps equal also one candle but within candle science we can know how long it should take before we continue hire from this bullish f for example and what the next candles at this moment in time should do now this two can rejection understanding can be useful then in understanding our bias in understanding our entry our risk management whatever you can think of so we understand two candle rejection is based on candle
science and candle signs is based on Fair Value gaps so 2K rejection and fair value gaps are essentially the same thing it's just dependent on what time frame you are looking at so right here from the daily fair value Gap we are looking at One Singular daily candle but what we just did on the lower time frame on the 1 hour we are looking at Fair Val gaps so we are looking at the same confirmation just on different time frames so with two can rejection there is three things that we can do either the first
candle rejects like we have right here we have this bullish fair value gap on the daily time frame then on the same time frame right here this first candle trading back into that daily bullish for Gap also creates a rejection in other words it is respecting this discount array right there then what can we expect from the next few candles well what did we mention what is the objective of price when we retrace back into that discount array to create a new fair value Gap as soon as possible so right here the first candle is
a rejection the second candle can follow through and create an expansion phase candle to create a new bullish F Gap as fast as possible like we see right there this means that after understanding this One Singular candle we right here can look at those premium arrays towards the left as our next Target right there the second option that we have in two cand rejection is if the first candle does not reject what happens if the first candle right here does not reject then the second candle is very likely to sweep in a bullish scenario the
previous candle low right there to then create the rejection to potentially continue higher then what should happen afterwards right here well the third candle right there should create an expansion phase candle to do what to create that new fair value Gap as soon as possible but then what is the third option the third option is when neither the first candle nor the second candle rejects now this also tells us arguably even more more valuable information so right here we ran into this premium array right there on us CHF That Swing high now we can expect
the retracement right here back into this fair value Gap when we create that retracement back into that fair value Gap we see the first candle is not a rejection it's creating this potential bearish fair value Gap right there and what do we see with the next candle the next candle right here actually creates this bearish value Gap so at that moment in time we have a bullish Gap that we are not necessarily respecting then we have a bearish f Gap so can we continue lower from this bearish F Gap but what do we see here
we sting into this bearish F Val Gap right there and we could argue this quite a big rejection right there so the next scandle what can it do it can continue lower right there if it wants to keep on respecting this bearish Gap and what do we see instead we have a new up candle right there closing Above This high so also not sweeping the previous candle High to then continue lower so what does this mean that means we are not respecting this bearish F Gap anymore instead we are disrespecting it and when we are
disrespecting this bearish Gap that means that we can now look at higher prices to Target this daily swing high right there and by going down the time frame what do we see right here we see that we create this bullish 4our F right there we have a sting into that first candle Rejects right there the second candle can follow through towards this target right there that we had established on The Daily now there's one last thing that is extremely important to understand this is what we call in the mmt an ugly two cand rejection so
we have this 4-Hour fap right there the first candle is somewhat of a rejection and the second candle still sweeps this previous candle High the third candle what we see right there is not an expansion phase candle lower instead it creates a long Wick at the bottom when it takes a lot of candles right there to continue lower that means it's an ugly 2 rejection and sooner or later when you go into lower time frame as well you'll see right here that this then turns into what we know as a consolidation right there good price
action means we will have a good 2k rejection all right perfect thank you
