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Fairvaluegap

DXY analysis based on ICT concepts and candle scienceHello, greatest community Since this is my first post, I sincerely hope you find it useful. I am going to start with a top-down analysis. First, based on the monthly chart. Currently, we are in the monthly SIBI, a reversal area. What are we supposed to look for next? A drop in momentum to the annual bisi target during the following months Weekly Chart It's Friday, the last day of the week. What can I see in this area right now? 1. It looks like we are about to create a weekly fair value gap, which we will trade from the following week in order to reach the next weekly SIBI shown on the chart. 2. On the other hand, we might make a BAG and search for the entry on the daily chart. NB: I will post more information this weekend if I find someone who is interested.
TVC:DXYLong
by bojmarley88_bm
1
The Fair Value Gap (FVG)The term "fair value gap" is known by various names among price action traders, including imbalance, inefficiency, and liquidity void. But what do these imbalances mean? They arise when the forces of buying and selling exert considerable pressure, resulting in sharp and rapid price movements. On a chart, a Fair Value Gap appears as a three-candlestick pattern. In a bullish context, an FVG forms when the top wick of the first candlestick does not connect with the bottom wick of the third candlestick. Conversely, in a bearish scenario, the FVG is created when the bottom wick of the first candlestick fails to connect with the top wick of the third candlestick. The gap on the middle candlestick, created by the wicks of the first and third candlesticks, represents the Fair Value Gap. The concept of FVG trading is based on the idea that the market has a natural tendency to self-correct. These price discrepancies or inefficiencies are generally not sustainable over time, and the market often returns to these gaps before continuing in the same direction as the original impulsive move. What are the Types of Fair Value Gaps? 1. Bearish Fair Value Gap A bearish Fair Value Gap occurs when there is a space between the bottom wick of the first candlestick and the top wick of the third candlestick. This gap typically appears on the body of the middle candlestick, and the individual characteristics of each candlestick are not particularly important. What’s crucial in a bearish scenario is that the gap on the middle candlestick results from the wicks of the surrounding candlesticks not connecting. 2. Bullish Fair Value Gap A bullish Fair Value Gap occurs when the top wick of the first candlestick does not connect with the bottom wick of the third candlestick. In this case, the specific direction of each candlestick is not as important. What really matters is that there is a gap in the middle candlestick, where the wicks of the first and third candlesticks have not linked. 3. Inverse Fair Value Gap An Inverse Fair Value Gap is an FVG that has lost its validity in one direction but remains significant enough to influence price movement in the opposite direction. For example, a bullish FVG is deemed invalid if it fails to act as a demand zone. However, it then transforms into an inverse bearish FVG, which may serve as a supply zone capable of holding the price. 4. Implied Fair Value Gap The Implied Fair Value Gap is also a three-candlestick pattern, but it does not feature a gap on the middle candlestick, which is why it’s called an “implied FVG.” Instead, it consists of a larger middle candle flanked by two relatively long wicks from the first and third candles. The “gap” is defined by marking the midpoint of the wick of the first candlestick that touches the middle candle and the midpoint of the wick of the third candle that also touches the middle candle. These two midpoints create the gap. Here are some factors that can lead to the formation of fair value gaps: 1. Economic Data Releases Key economic data releases, such as changes in interest rates or unemployment statistics, can similarly create imbalances. If the data surprises the market, it can trigger a swift price movement in one direction, resulting in a gap. 2. Sudden News Events Unexpected news that significantly affects market sentiment can lead to a rapid increase in buying or selling activity, resulting in a gap as prices adjust to the new information. For instance, if a company unexpectedly reports strong earnings, its stock price may surge, creating a gap on the chart. 3. Market Openings or Closings Gaps may form during periods of low liquidity, such as at market openings or closings. With fewer market participants, even a small amount of buying or selling can cause a noticeable price jump that isn’t quickly countered. 4. Large Institutional Trades Significant trades by institutional investors can also lead to fair value gaps (FVGs). When a hedge fund or financial institution executes a large buy or sell order, it can overwhelm the existing order book, causing a rapid price shift and leaving a gap behind. 5. Weekend Gaps FVG's are often observed between the close on Friday and the open on Monday, reflecting news or events that occurred over the weekend. KEY POINTS TO KNOW - Fair Value Gaps (FVGs) are powerful tools traders use to identify market imbalances and inefficiencies. - FVGs occur when buying or selling pressure leads to significant price movements, leaving behind gaps on price charts. - FVGs can be identified through technical analysis involving the analysis of candlestick patterns and price chart patterns. - Traders can categorize FVGs into two types: Undervalued FVGs, where prices are lower than fair value, and Overrated FVGs, where prices are higher.
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Education
by TaylorDeMario
4
Fair Value for S&P 500, Price Targets for the next 12 monthsGoing into next week I calculate fair value for the S&P 500 to be between 5,400 and 4,800 with an average target of 5,100 over the next 12 months. The low end of the range factors in any chance that we see the economy creep to a stagnant point over the next 12 months. If by some miracle the economy should continue to experience above average GDP growth, the S&P 500 could go as high as 6,300 in the year ahead Investors should be cautious about making any large stock purchases if we continue to see unemployment rise and GDP growth slow. Holding off for better buying opportunities is for the best with the S&P 500 above the 5,400 level. The market is likely to continue to see downward pressure. Right now, earnings growth projections are lofty and likely to be revised downward over the next 6 months.
CME_MINI:ES1!
by D1Finance
Trading EURUSD | Judas Swing Strategy 12/08/2024We ended last week on a positive note, with four trades taken and three big wins on #EURUSD, #GBPUSD and #NZDUSD. This success has heightened our anticipation for the opportunities this week may present. We began our trading day at 8:25 EST by marking the zones for the Judas Swing strategy. This is a fundamental part of the checklist and cannot be skipped. After an hour and 5 minutes, there was a sweep of liquidity at the high of the zone, indicating we will be looking for potential selling opportunities this trading session. Following the liquidity sweep, there was a break of structure (BOS). Now, we simply need to wait for price to retrace into the fair value gap (FVG) that was created before entering a sell position. Although we had a bias for the trading session, we do not rush into every selling opportunity. Instead, we wait for a Break of Structure (BOS) on the sell side. The price leg that establishes this BOS should leave behind a Fair Value Gap (FVG), and price must retrace into this FVG before we consider executing a trade using this strategy. After 30 minutes a bullish candle filled the FVG, indicating that upon its close, we could execute our trade as all the prerequisites for entry on our checklist were satisfied. Our position was profitable for approximately 15 minutes before plunging us into a drawdown. During this drawdown period, we remained composed because we had a solid risk management strategy and only risked what we could afford to lose. We allocated just 1% of our trading account to this trade, targeting a 2% return. After 30 minutes into the trade, our stop loss was triggered, resulting in a 1% loss of our trading account. It's important to note that incurring losses is a normal part of trading. This particular strategy has a win rate of approximately 50%. However, with a positive risk-reward ratio of 1:2, adhering to this strategy can lead to consistent profitability in the long run.
by CleoFinance
Trading NZDUSD | Judas Swing Strategy 06/08/2024Every trader relishes ending the trading week positively, and that was precisely our experience last week. The Judas Swing strategy produced two trades, one on EURUSD and the other on GBPUSD, both of which turned out being winners. This positive experience has heightened our excitement for the possibilities that this week may bring. As is customary, at 8:25 AM EST, we commenced the day by reviewing the essential items on our Judas Swing strategy checklist, which comprises: - Setting the timezone to New York time - Confirming we're on the 5-minute timeframe - Marking the trading period from 00:00 - 08:30 - Identifying the high and low of the zone After 25 minutes, there was a sweep of liquidity at the low of the zone, indicating we will be looking for potential buying opportunities this trading session. Following the liquidity sweep, there was a break of structure (BOS). Now, we simply need to wait for price to retrace into the fair value gap (FVG) that was created before entering a buy position. The subsequent candle entered the Fair Value Gap, indicating that upon its close, we could execute our trade as all the prerequisites for entry on our checklist were satisfied. This position barely experienced any drawdown, as it became profitable 25 minutes after executing the trade. We risked a mere 1% of our trading account, aiming for a 2% return from this trade. All that remained was to wait patiently, having already accepted the outcome of our trade, be it a win or a loss. Based on the data collected for NZDUSD, we anticipate an average trade duration of six hours and fifteen minutes. After 45 minutes, our Take Profit was triggered, and our patience paid off as we hit our target on NZDUSD, resulting in a 2% gain from a 1% risk on the trade.
by CleoFinance
Trading EURUSD | Judas Swing Strategy 30/07/2024Risk management ought to be a trader's closest ally, as the previous week demonstrated the practical significance of incorporating risk management into every trader's toolkit. Last week, we executed four trades; despite having only one win and three losses, we concluded the week with a mere 1% loss on our trading account. This has heightened our excitement for the opportunities that this week may present. As is customary, at 8:25 AM EST, we commenced the day by reviewing the essential items on our Judas Swing strategy checklist, which comprises: - Setting the timezone to New York time - Confirming we're on the 5-minute timeframe - Marking the trading period from 00:00 - 08:30 - Identifying the high and low of the zone The next 5 minute candle swept liquidity resting at the low of the zone, which meant our focus would be on identifying potential buying opportunities for the trading session. To increase the likelihood of success of our trades, we wait for a break of structure (BOS) towards the buy side. Once the BOS occurs, we anticipate price to retrace to the initial Fair Value Gap (FVG) created during the formation of the leg that broke the structure. We patiently waited for price to retrace into the created Fair Value Gap (FVG), and executed our trade upon the closing of the first candle that entered the FVG, as all the conditions on our checklist for trade execution were satisfied. Please note that our stop loss is set at the low of the price leg that broke structure, and we implement a minimum stop loss of 10 pips. The minimum stop loss value was not chosen randomly; it was determined through extensive backtesting. This allows trades sufficient space to fluctuate, avoiding premature stop-outs and trades later moving in our anticipated direction. After 15 minutes, a large bearish marubozu candle formed, which could have exited us from the trade if we had set our stop loss solely based on the low of the price leg that broke structure, without including a minimal stop loss in our checklist. By using that price leg, our stop loss would have been around 6 pips, whereas a 10 pip stop loss provides the trade with sufficient breathing room. We are aware that our strategy does not guarantee a 100% win rate but rather hovers around 50% on EURUSD, indicating that some losses were inevitable. To avoid becoming emotional over the position, we used only 1% of our trading account with the goal of achieving a 2% gain. Upon checking our position later, we observed that the position was a few pips away from hitting SL. We remained calm despite the drawdown we were experiencing and were prepared for any outcome of the trade. All that was left was to wait for either our stop loss or take profit to be triggered to determine the result of our trade. A few hours later, the trade began to move in our favor. After 13 hours, our Take Profit was triggered, and our patience paid off as we hit our target on EURUSD, resulting in a 2% gain from a 1% risk on the trade.
Education
by CleoFinance