Boot Camp Day 16: FVG Pt. 2
Introduction and Promise to Upload Daily Videos
The video starts with the speaker apologizing for the late upload and mentions being in Miami. Despite having no sleep, the speaker promises to upload a video every day.
- The speaker apologizes for the late video and acknowledges that some viewers may be asleep.
- They mention being in Miami and not having any sleep.
- Despite this, they promise to continue uploading videos daily.
Topic: Fair Value Gaps Part 2
The speaker confirms that today's topic is "Fair Value Gaps Part 2" and expresses their intention to discuss how to identify fair value gaps and potentially take trades based on them.
- The speaker confirms that today's topic is "Fair Value Gaps Part 2."
- They mention discussing how to identify fair value gaps.
- They also mention exploring potential trading opportunities based on fair value gaps.
Identifying Fair Value Gaps
The speaker introduces the concept of fair value gaps and explains that today's focus will be on identifying them. They also mention that day three will cover taking trades based on fair value gaps.
- Fair value gaps are areas in the market where there is a lack of liquidity or resting orders in the opposite direction of price movement.
- Today's focus is on identifying fair value gaps.
- Day three will cover taking trades based on fair value gaps.
Recap: Fair Value Gaps as Retracements
The speaker provides a quick recap of fair value gaps as retracement tools. They clarify that fair value gaps are not used for reversals but rather as opportunities for retracements and continuations.
- Fair value gaps are liquidity voids or imbalances in the market.
- Price moves into these gaps due to a lack of resting orders.
- Fair value gaps are retracement tools, not reversals.
- They provide opportunities for retracements and continuations.
Three Candle Pattern for Fair Value Gaps
The speaker explains that fair value gaps can be identified using a three-candle pattern. They describe the pattern and how to measure the area of fair value.
- Fair value gaps can be identified using a three-candle pattern.
- The first candle is small, followed by a large second candle creating the imbalance.
- The third candle confirms the fair value gap.
- The area of fair value is measured from the top of the first candle's wick to the bottom of the third candle's wick.
Identifying Liquidity Voids and Resistance
The speaker discusses how to identify liquidity voids and resistance within fair value gaps. They explain that areas with no resistance through wicks indicate a lack of resting orders.
- Liquidity voids or fair value gaps are areas without resistance or resting sell/buy orders.
- Lack of resistance through wicks indicates no resting orders in those areas.
Drawing Boxes for Fair Value Gaps
The speaker demonstrates how to draw boxes or rectangles to represent fair value gaps on charts. They emphasize waiting for price reactions within these areas.
- Draw boxes or rectangles on charts to represent fair value gaps.
- Wait for price reactions within these areas before taking action.
Fair Value Gaps as Retracements, Not Reversals
The speaker reiterates that fair value gaps should be seen as retracements rather than reversals. They clarify that bullish fair value gaps are sought for continuations, not to reverse an upward trend.
- Fair value gaps are retracements, not reversals.
- Bullish fair value gaps indicate opportunities for continuations in an upward trend.
Fair Value Gaps and Equilibrium
The speaker explains that fair value gaps and equilibrium are used to find trades based on retracements and continuations. They emphasize the importance of understanding how to use these concepts effectively.
- Fair value gaps and equilibrium help identify trades based on retracements and continuations.
- Understanding how to use these concepts is crucial for effective trading strategies.
Identifying Bullish Fair Value Gaps
The speaker discusses the identification of bullish fair value gaps in a rising market. They highlight the need to look for retracements into these gaps rather than expecting them to reverse the trend.
- In a rising market, look for bullish fair value gaps.
- Seek retracements into these gaps instead of expecting them to reverse the trend.
Three-Candle Pattern for Fair Value Gaps
The speaker reiterates the three-candle pattern used to identify fair value gaps. They explain how measuring from the top of the first candle's wick to the bottom of the third candle's wick helps determine the area of fair value.
- Use a three-candle pattern to identify fair value gaps.
- Measure from the top of the first candle's wick to the bottom of the third candle's wick.
- This measurement determines the area of fair value.
Conclusion: Applying Fair Value Gaps on Charts
The speaker concludes by mentioning that they will demonstrate examples on charts to show how fair value gaps work in practice.
- The speaker concludes the explanation of fair value gaps.
- They mention demonstrating examples on charts to illustrate their application.
Timestamps are approximate and may vary slightly.
New Section
This section discusses the concept of Value Gap and how to identify it in the market.
Identifying Value Gaps
- A Value Gap occurs when there are areas in the market without wicks covering them.
- Example: A bearish gap followed by a rally.
- To identify a Value Gap, look for retracements onto this fair value gap.
- Confirmation of a bearish bias can be seen through a breakout structure.
New Section
This section emphasizes the importance of waiting for confirmation before executing trades based on Value Gaps.
Waiting for Confirmation
- It is important to wait for confirmation before entering trades solely based on fair value gaps.
- Look for reactions, changes in market structure, or bullish/bearish candles as confirmation signals.
- Be patient and avoid assuming that all fair value gaps will work as expected.
New Section
Homework assignment: Identify 10 fair value gaps within the market and create hypothetical trade scenarios.
Homework Assignment
- Choose one pair to trade on and identify 10 fair value gaps within the market.
- Create hypothetical trade scenarios based on these fair value gaps, considering stop levels and target prices.
New Section
Understanding what constitutes a real fair value gap and how to differentiate it from other patterns.
Differentiating Real Fair Value Gaps
- A real fair value gap is a three-candle pattern where the first candle's wicks do not fill the second candle's body.
- Avoid trading patterns where price has already filled the liquidity void or does not meet the criteria of a bullish or bearish fair value gap.
New Section
Recap on identifying real fair value gaps and using the second candle as an imbalance indicator.
Recap on Fair Value Gaps
- A real fair value gap is identified by using the wicks of the first and third candles, with the second candle indicating an imbalance.
- Price action can be analyzed on lower time frames to confirm break of structure before executing trades.
New Section
Final reminders for homework assignment: identify real fair value gaps and understand their characteristics.
Final Reminders
- Complete the homework assignment by identifying both real fair value gaps and patterns that do not meet the criteria.
- Understand the three-candle pattern and how to differentiate between valid fair value gaps and other patterns.