ICT Concepts - Immediate Rebalance (Strongest Signature) 🤫

Summary

This video dives into advanced trading concepts, focusing on the significance of fair value gaps, immediate rebalances, and the importance of higher time frame analysis for identifying strong bullish market conditions. It explains how inefficiencies (gaps) in the market often attract price to return for rebalancing, and how immediate rebalances are a clear signature of strength, indicating likely rapid price movements. The video also discusses the application of the macro power of three concept, emphasizing timing and liquidity draw in trading strategies for higher probability setups. The focus is on combining clear directional bias, liquidity confluence, and precise entry criteria for successful trading.

Takeaways

• 😀 Immediate Rebalance is a strong bullish signal, often showing rapid upward price movement after a price imbalance or fair value gap is filled.
• 😀 A Fair Value Gap (FVG) represents an inefficiency in price movement, where price is likely to return to before continuing its trend.
• 😀 Immediate Rebalances occur when price comes down to a wick of a previous candle, filling the gap to prevent further inefficiency in price action.
• 😀 When you spot an immediate rebalance on your charts, it acts as a signature of strength, indicating that price is likely to continue its uptrend.
• 😀 The most reliable immediate rebalances are identified on higher timeframes (1-hour, 4-hour, daily, or weekly), where the significance of price movement is greater.
• 😀 Measuring the quadrants of a wick (top 25%, 50% mid-point, and beyond) helps refine entries for higher probability trades.
• 😀 For higher probability trades, aim for setups within a 'macro window,' where price moves are aligned with larger market trends.
• 😀 A macro 'Power of Three' checklist should be used when entering trades, with attention to liquidity draw, market timing, and price action.
• 😀 Avoid trading immediate rebalances without a clear directional bias and a solid understanding of liquidity and market context.
• 😀 A successful trade setup typically includes delivery to key liquidity areas, such as higher timeframe wicks, followed by a macro inversion to confirm the move.
• 😀 The combination of immediate rebalance with a macro setup offers a highly probable entry signal for bullish markets.

Q & A

What is a Fair Value Gap (FVG) and why is it important in trading?

A Fair Value Gap (FVG) is a three-candle formation that leaves behind an inefficiency, a gap where price tends to return to and continue its trend from. It is important because it helps identify areas where price may retrace before continuing in the direction of the primary trend, offering potential entry points for traders.

What does an Immediate Rebalance signify in trading?

An Immediate Rebalance occurs when price moves back into the wick of a prior candle to eliminate any inefficiency and then quickly resumes its trend. It is a bullish sign, suggesting market strength, and can signal rapid upward movement when observed.

Why is it critical to look at higher timeframes (1H, 4H, daily, weekly) when using Immediate Rebalances?

Higher timeframes provide more reliable and precise signals. Immediate Rebalances on these timeframes indicate a stronger market trend and offer more confidence for traders to make decisions based on these setups.

How can quadrant analysis of wicks improve trading precision?

Quadrant analysis divides a wick into four sections, with particular focus on the 25% (upper quadrant) and 50% (consequent encroachment) levels. Watching for price reactions at these levels allows traders to identify potential reversals with greater precision, improving entry and exit points.

What is the Macro Power of Three (PO3) and how does it affect trade entries?

The Macro Power of Three (PO3) is a trading strategy that aligns time and price to identify high-probability entries. It involves waiting for price to manipulate the market in a way that supports larger time-frame setups, ensuring entries are made during optimal conditions, with a focus on higher timeframe reference points.

What role does liquidity play in identifying trading setups?

Liquidity pools, such as swing highs or lows, act as key reference points for price to draw towards. Understanding where liquidity lies helps traders identify where price is likely to move and where a reversal or continuation could occur.

How do you determine whether a price action setup is favorable for a long trade?

To determine if a setup is favorable for a long trade, look for a clear bullish trend, the presence of liquidity pools (e.g., swing highs), and the occurrence of an Immediate Rebalance or Macro Power of Three setup. The setup should align with a directional bias, such as price being drawn to a premium or a swing high.

What does it mean when an Immediate Rebalance occurs on the third or subsequent candle?

When an Immediate Rebalance happens on the third or subsequent candle, it confirms that the inefficiency (gap) is being corrected and that price is likely to continue in the same direction. This is a strong market signal, especially when observed with bullish order flow.

How does macro time influence trade setups and decisions?

Macro time influences trade setups by providing a broader context for price action. It helps traders focus on higher timeframes (1H, 4H, daily) for critical setups, ensuring that trades are made in alignment with larger market movements. It also provides entry points during key market windows that have higher probability.

What are the key takeaways for trading with Immediate Rebalances?

Key takeaways for trading with Immediate Rebalances include: 1) Do not trade every Immediate Rebalance—ensure the directional bias and liquidity draw are clear. 2) Use the Macro Power of Three entry checklist to confirm setups. 3) Focus on time and price alignment for the best trading conditions.