The Unknown PD Array - Redelivered Rebalanced

Summary

This video explains the concept of Redelivered Rebalance (RDR), a key market level that occurs when price retraces into a balanced price range instead of an imbalance. In bullish and bearish scenarios, RDRs signal where price may continue higher or lower, avoiding the need to revisit previous imbalances. The video explores how traders can use RDRs to identify entry points, anticipate Breakaway Gaps, and set up effective risk management strategies. By understanding RDRs, traders can improve their ability to forecast price action and make informed decisions when price retraces into key levels.

Takeaways

• 😀 Imbalances occur when there’s a gap between the first candle’s high and the third candle’s low, signaling a price retracement may occur.
• 😀 A Redelivered Rebalance happens when price fills the imbalance gap, creating a balanced price range that no longer requires rebalancing.
• 😀 Redelivered Rebalance is crucial for understanding when price will likely continue higher or lower after filling an imbalance.
• 😀 A Breakaway Gap is formed when a Redelivered Rebalance exists above an imbalance, suggesting price will not retrace into the imbalance and will continue in the direction of the trend.
• 😀 Redelivered Rebalances reduce the likelihood of price retracing into prior imbalances, making them important for predicting price continuation.
• 😀 Traders should watch for price reactions at Redelivered Rebalances to identify potential market reversals or continuation.
• 😀 When price retraces into a Redelivered Rebalance, it indicates that the price has already balanced, and further retracement is unlikely.
• 😀 Understanding Redelivered Rebalances helps traders anticipate when price action will continue in a bullish or bearish direction, based on previous market structure and imbalances.
• 😀 The theory behind Redelivered Rebalances is that they represent a balanced price range, reducing the need for further mitigation of inefficiencies in price action.
• 😀 A strong price displacement after a Redelivered Rebalance signals a potential market reversal, where down candles support price moving higher in a bullish scenario.

Q & A

What is a redelivered rebalance in the context of price action?

A redelivered rebalance refers to a balanced price range where price has already rebalanced itself. Unlike an imbalance, which shows an inefficiency in the market, a redelivered rebalance occurs when price fills the gap between the high of the first candle and the low of the third candle, resulting in a balanced price range rather than an imbalance.

How does a redelivered rebalance differ from an imbalance?

An imbalance occurs when there is a gap between the high of the first candle and the low of the third candle, indicating inefficiency. A redelivered rebalance, however, forms when the upper wick of the first candle closes past the bottom wick of the third candle, filling the gap and balancing the price range. This shift eliminates the inefficiency, turning the area into a balanced price range.

Why is the upper wick of the first candle important in identifying a redelivered rebalance?

The upper wick of the first candle must close past the bottom wick of the third candle to complete the redelivered rebalance. This closure indicates that the gap between the first and third candles has been filled, transforming the previous imbalance into a balanced price range.

What happens when a redelivered rebalance is formed?

When a redelivered rebalance forms, the price has already addressed inefficiencies in the market. As a result, the likelihood of price revisiting previous imbalances is reduced. The area becomes a breakaway gap, and price is more likely to continue in the anticipated direction, either higher in a bullish scenario or lower in a bearish scenario.

What is a breakaway gap, and how is it related to a redelivered rebalance?

A breakaway gap is formed when a redelivered rebalance exists above an imbalance. In a bullish scenario, once the redelivered rebalance fills the gap, it becomes a breakaway gap, and price is less likely to return to the imbalance below. This gap indicates a strong market shift, often signaling price continuation in the direction of the gap.

Can a price retracement invalidate a bullish or bearish scenario?

No, a price retracement, even if it goes deeper than expected, does not invalidate the overall bullish or bearish narrative. Sometimes, price retracements occur to accumulate more positions before continuing in the anticipated direction. It’s important to distinguish between a deeper retracement and a reversal of the trend.

What does a market structure break signify in price action analysis?

A market structure break occurs when price moves past a previous high or low, breaking the established trend. This shift in structure indicates a change in the prevailing market direction, often signaling the start of a new trend or reversal.

How can you use a redelivered rebalance to identify a key level in the market?

To identify a key level using a redelivered rebalance, look for a price level where the first candle's upper wick closes past the bottom wick of the third candle. This balanced price range indicates a redelivered rebalance, and price is likely to respect this level, continuing higher or lower, depending on the overall trend.

How does the concept of a redelivered rebalance help traders anticipate market movements?

The redelivered rebalance helps traders anticipate that once a price reaches this balanced level, there is less likelihood of price revisiting previous imbalances. The area becomes a key support or resistance level, and traders can look for price reactions at these levels to predict continuation or reversal of the trend.

What role does liquidity play in the context of price action and redelivered rebalances?

Liquidity plays a critical role in price action, especially when redelivered rebalances are formed. Price tends to move towards areas of liquidity, such as previous high/low points or key levels like order blocks. A redelivered rebalance indicates that price has already balanced out inefficiencies and may now seek additional liquidity to continue its movement, often leading to breakaway gaps or trend continuation.