My Secret To Having A Strong Bias - Inverse FVG's

Summary

This video tutorial delves into the concept of inverse fair value gaps, a trading strategy used to identify market trends. It explains the basics of fair value gaps and then contrasts them with inverse fair value gaps, which occur when a gap is breached and subsequently acts as support or resistance. The presenter uses real-time chart examples to demonstrate how these gaps can provide a bias for future price movements and help traders understand potential draw on liquidity. The video is a valuable resource for traders seeking to refine their strategies and gain confidence in market analysis.

Takeaways

• 🔍 The video focuses on explaining inverse fair value gaps in trading.
• 📊 Fair value gaps are typically identified within a three-candle structure in candlestick charts.
• 📉 An inverse fair value gap occurs when a fair value gap is broken through and then acts as support or resistance.
• 🔄 The inverse fair value gap behaves similarly to how resistance can turn into support and vice versa.
• 💡 The concept is used to understand potential support levels once a fair value gap is violated.
• 📝 Examples of inverse fair value gaps are provided to illustrate how they can indicate market direction and bias.
• 📈 These gaps help traders identify the likely direction of price movement by showing which gaps are respected or disrespected.
• 🛠 Traders can use inverse fair value gaps to determine strong biases and anticipate future price actions.
• 👀 Observing these gaps across different time frames (e.g., 5-minute, 15-minute charts) is crucial for accurate analysis.
• 🤔 The video encourages viewers to incorporate inverse fair value gaps into their trading strategies for better decision-making.

Q & A

What is a Fair Value Gap (FVG) in trading?

A Fair Value Gap is a three-candle structure in trading where a gap is created between the wicks of the first and third candles, representing an imbalance or inefficiency in the market.

How is an Inverse Fair Value Gap different from a regular Fair Value Gap?

An Inverse Fair Value Gap occurs when a regular Fair Value Gap is broken through and then acts as support or resistance, depending on the direction of the breakout.

What is the significance of a Fair Value Gap in technical analysis?

Fair Value Gaps indicate areas of potential support or resistance and can signal future price movements when the gap is respected or disrespected by the market.

How can traders use Inverse Fair Value Gaps to their advantage?

Traders can use Inverse Fair Value Gaps to gauge market strength and bias. If a Fair Value Gap is broken and then holds as support or resistance, it can indicate the direction of future price movements.

What does it mean when a Fair Value Gap 'disrespects' a level?

When a Fair Value Gap disrespects a level, it means that the price breaks through the gap without holding it as support or resistance, indicating a potential shift in market direction.

Why is it important to consider both bullish and bearish Fair Value Gaps?

Considering both bullish and bearish Fair Value Gaps helps traders understand market sentiment and potential reversal points, enhancing their trading strategy and bias.

How do traders determine if a Fair Value Gap will act as support or resistance?

Traders observe price action around the Fair Value Gap. If the price breaks through and holds above the gap, it acts as support; if it holds below, it acts as resistance.

What role does market structure play in analyzing Fair Value Gaps?

Market structure helps traders identify key levels and potential reversals. Observing Fair Value Gaps within the context of market structure provides insights into price direction and strength.

Can you provide an example of how an Inverse Fair Value Gap is used in a real trading scenario?

In a bearish scenario, if a bearish Fair Value Gap is broken and the price comes back to hold it as support, traders may use this as a confirmation to enter a long position, expecting higher prices.

What is the main takeaway from understanding and using Inverse Fair Value Gaps in trading?

The main takeaway is that Inverse Fair Value Gaps help traders build confidence in their market bias and trading strategy by indicating areas of support and resistance, aiding in the prediction of future price movements.

Outlines

00:00

📈 Introduction to Inverse Fair Value Gaps

This paragraph introduces the concept of inverse fair value gaps, a trading strategy tool that the speaker will explain in the video. It begins by defining a regular fair value gap, which is a three-candle formation with a gap between the high of one candle and the low of the next. The inverse fair value gap is then described as a situation where the market breaks through a regular fair value gap and then returns to it, where it acts as support or resistance, depending on the market direction. The speaker aims to clarify how to use this tool for trading bias and understanding market movements.

05:01

📉 Using Inverse Fair Value Gaps for Trading Bias

The speaker discusses how to use inverse fair value gaps to determine market bias. They provide examples from trading charts, explaining how breaking through a bearish fair value gap and then seeing it act as support can indicate a potential upward movement. The paragraph emphasizes the importance of observing how the market respects or disrespects these gaps, which can provide insights into future price action. The speaker also uses specific chart examples to illustrate how to identify and utilize inverse fair value gaps in trading scenarios.

10:03

💡 Advanced Strategies with Inverse Fair Value Gaps

In this paragraph, the speaker delves deeper into the use of inverse fair value gaps, focusing on how they can be used to identify potential draw and liquidity levels in the market. They explain that by observing which fair value gaps are respected or disrespected, traders can gain a better understanding of market strength and weakness. The speaker provides several examples to demonstrate how to apply this knowledge in different trading situations, ultimately aiming to enhance trading strategy and confidence.

Keywords

💡Inverse Fair Value Gap

An 'Inverse Fair Value Gap' is a trading concept where a regular fair value gap, which is a price area between two candles on a chart, is broken through and then acts as support or resistance in the opposite direction. In the video, this concept is central to understanding market dynamics and predicting future price movements, as it helps traders identify potential trend reversals or continuations.

💡Fair Value Gap

A 'Fair Value Gap' is a three-candle formation on a price chart where a gap is created between the wick of the first candle and the body of the third candle. It is used to identify potential areas of support or resistance. In the script, the concept is foundational to explaining the inverse fair value gap and is used to demonstrate how price gaps can change roles from resistance to support.

💡Candle Structure

The 'Candle Structure' refers to the visual representation of price movements over a specific time period on a financial chart, consisting of a body and wicks (or shadows). It is a key element in understanding price action and is used in the video to illustrate how fair value gaps are formed and identified.

💡Support and Resistance

'Support and Resistance' are levels on a price chart where the price tends to stop falling (support) or rising (resistance). These levels are crucial in technical analysis and trading strategies. In the video, the concept is applied to explain how fair value gaps can act as either support or resistance, depending on market conditions.

💡Market Structure Shift

A 'Market Structure Shift' occurs when there is a significant change in the market trend, often marked by a break of a significant support or resistance level. The script uses this term to describe moments when the market's direction changes, which can be identified using fair value gaps.

💡Bias

In trading, 'Bias' refers to the direction in which a trader expects the market to move, either bullish (upwards) or bearish (downwards). The video uses the term to discuss how inverse fair value gaps can provide a trader with a stronger conviction in their trading direction.

💡Liquidity

'Liquidity' in the context of trading refers to the ease with which assets can be bought or sold without affecting their price. The script mentions 'draw on liquidity' to describe the potential price target or level that traders anticipate the market will reach, influenced by the behavior of fair value gaps.

💡Break and Hold

'Break and Hold' is a phrase used to describe a situation where a price level is surpassed (broken) and then maintains its new position (held), indicating a potential change in market sentiment. The video uses this concept to explain how the behavior of inverse fair value gaps can confirm a trader's bias.

💡Doji Candle

A 'Doji Candle' is a type of candlestick pattern that signifies indecision in the market, where the open and close prices are very close, often forming a small body with long wicks. In the script, it is used as an example of a reversal pattern that can be identified alongside fair value gaps.

💡Reversal

A 'Reversal' in trading terms refers to a change in the direction of a price trend. The video discusses how the interaction with fair value gaps can indicate potential trend reversals, which are critical for traders to identify new trading opportunities.

💡Disrespect

'Disrespect' in the context of the video refers to the price action that fails to honor or respect a previously established support or resistance level, such as a fair value gap. It is used to illustrate scenarios where the market invalidates a trader's expectation, indicating a potential shift in the market's direction.

Highlights

Introduction to the concept of inverse fair value gaps and their use in trading.

Explanation of what a regular fair value gap is and its three-candle structure.

The definition of an inverse fair value gap as a regular gap that gets broken through and acts as support or resistance.

The use of inverse fair value gaps to determine market bias and potential price direction.

How to identify a fair value gap on a chart and its potential to switch from resistance to support.

Examples of using inverse fair value gaps on ES and NQ charts to understand market structure shifts.

The importance of observing how price reacts when it revisits an inverse fair value gap.

Strategies for using inverse fair value gaps to confirm a bearish or bullish bias in trading.

The application of inverse fair value gaps in conjunction with market structure shifts for trading decisions.

How to use inverse fair value gaps to identify potential entry points in the market.

Transcripts

all right welcome guys to another video

a new video today we are going to be

going over inverse fair value gaps just

another one that's been requested now

we've done videos in the past on Fair

Value gaps but not a lot of people know

maybe what an inverse fair value Gap how

to use an inverse variable eye Gap how

do I specifically use inverse feral eye

gaps so that's what we're going to be

going talking over today and the first

thing I just want to want to start over

is you know just the basics right so

exactly you know what is a regular you

know fair value Gap first so looking at

you know candle structure candle

formation we know right that a fair

value Gap is a three candle structure so

what does it look like

we have you know a candle here

and then we have

you know another candle here

right

and then we have another candle here

you can see

the body right

this is our Fair like effort what a fair

bike up would look like right we have

three candle formation right to the

downside one two three and we have a gap

here created

that is our fair value Gap or what would

be considered you know our fair value

Gap so we take the previous Wick right

to the next Wick and this now becomes

Our Fair Value Gap right it's the body

of you know this candle formation so now

what is an inverse trivia Gap well in

inverse for Value Gap is just a regular

fair value Gap that gets broken through

and then comes back to to add support or

add resistance so if we had you know a

bearish fair value Gap like this what an

inverse for Value Gap would be is you

know let's say a regular fair value Gap

would be you know we'd come up into this

and then reject and come back lower but

let's say we actually disrespect this

free value Gap end up breaking through

it right

so now an inverse verbi Gap is once we

break through the sphere value Gap we

would want to see it now hold and act as

support so a lot of the times pass for

Value gaps will then switch by it or you

know switch just like you know

resistance turn support support can turn

resistance it's the same thing with a

fair value Gap right so once we break

through this password value Gap this is

now going to act as an inverse private

act and going to act as support when we

come back into it and then possibly go

look to see higher so again inverse for

Value Gap just a regular for Value but

used once we break through it right in

the opposite direction we now want to

see that fair value Gap hold and you

know so you know show some sort of

strength right so looking at the charts

now let's see if we can find some

examples and actually how do I use them

to my bias right A lot of the times what

I use inverse previews for is it

actually gives me a good bias and

understanding of where price wants to go

next for example looking at today on ES

going going down to the five minute

we can see that we had you know clear

cells out here we can see all these lows

we have one two three four five you know

five low stacked here right this is a

clear cell side level acting right

actually wait I think it was on NQ let

me pull up NQ NQ pretty similar here as

well

and cue a little bit more uh clear to

understand right we have

clear buy side level we have two equal

highs up here ends up getting swept we

have Market structure shift and then

looking at the 15 minute you can see let

me get past all these old drawings off

so he doesn't mix up

you can see we had break a structure and

then we had this 15 minute fair value

Gap here that we ended up coming back

into and then rejecting to go back lower

you can see what came up and that ended

up selling off from fomc so how do I use

an inverse for by Gap what would

possibly be an example of one well let's

look at the five minute here well you

can see

looking at this chart here

we have you know a big move to the

upside now once we sweep this level here

what am I now I'm not bullish anymore

I'm bearish right once we sweep this

biased level again looking at a bigger

time frame like the 15 minute once we

sweep this you know battle side level

what do I think is the drawing liquidity

the next round liquidity obviously

becomes whatever that next low is so

this now becomes the draw on liquidity I

called this live when we were you know

with the team I said the Drone liquidity

is going to be you know this low after

seeing you the structure we've been

playing out but how can I use an inverse

inverse for Value Gap to give me a sort

of an even more strong bias going

towards you know something like this so

let's go down to the five minute so if I

am bearish now right when this holds and

I'm bearish I want to see some sort of

bullish fair value Gap show disrespect I

don't want to see us respect a bullish

preview so if we're looking at the five

minute we can see right we have you know

this fair value Gap here and we have you

know this fair value Gap here so if I'm

bearish I don't want to see us continue

to respect these levels so looking at

this very I got by draw this in you can

see we come down and we end up holding

it right we're still respecting it

notice we end up breaking through it

once we break through this this now

gives me an a more confident short bias

knowing we could possibly go lower right

this tied in with our Market structure

shift right if we're looking at the five

minute we don't have any marks or shift

nothing yet until we sweep this low

notice this was the first low that we

actually was broken after sweeping by

side that we actually got you know big

displacement and then we had to pull

back to this Fair Valley Gap right here

right but once we broke through this 15

minute free value Gap that gave us a

little bit more confidence to possibly

see lower now if we're looking at this

chart as well we can see we had a 15

minute for Value Gap

we have a 15 minute provide up here what

do I want to see if we're bearish I

don't want to see us respect this I want

to see us break through it so notice do

we continue to hold this bounce up

bounce up bounce up and we continue to

hold this here what do I want to see if

I'm bearish I want to see a break of

this right notice I would not have taken

a short here quite well actually I would

have taken a short because we have a uh

you know clear Market structure shift

pull back to fair value Gap but if I'm

bearish I want to see these bullish fear

like apps get disrespected and then

possibly look to see how they're going

to react once they get touched off of

right so let's look at some more

examples here so looking at the same

chart here right now once we come down

and we sweep this level here we bounce

off this one hour fair value Gap what do

I now want to see I want to see internal

breaker structure and I want to see you

know I want to see some sort of brake

structure in some sort of displacement

right so that's what we get down here we

can see we got breaker structure good

displacement we have a fair value Gap

right that could be a possible entry

another possible entry could be right

here in this River I got now I actually

wanted to take a long I was looking to

get in here ended up not missing it but

notice the inverse for Value Gap that we

have on a bigger time frame like this

five minute we have this massive fair

value Gap that we actually created from

fomc what do I want to see this now I

want to see this now act as support to

go to buy side notice I draw this in as

well as looking at we have a 15 minute

Gap as well lined these are the areas

that you will see be respected the most

this is a perfect formation of a

reversal notice

this is right here what you want to

watch big move down doji candle

inversion candle big move back up notice

we have a fair value gap on both sides

right here we have an inverse fair value

up here and we have a bullish for Value

Gap right here in the exact same area

this is going to be an area that you're

going to see get respected a lot

especially because you have a bullish

fair value Gap and an inverse for Value

Gap so these are the areas that we want

to see get respected a lot notice

similar area right here we have that one

hour or that one minute past Fair Valley

Gap we pull it over we come back into

this and you can see how much we respect

this inverse for Value Gap once we break

above it so

what's another way that I use this

well the way that I like to think about

inverse for Value gaps is this

let's say on the 15 minute today we come

down and notice we actually never swept

this low down here but we swept this low

and we swept this low so I'm in the back

of my head thinking okay you know what

maybe we're still bearish we possibly

could go back down to sweep South Side

what's going to give me confidence that

buy side is now the Drone liquidity and

not sell side

well if we can break through this big

bearish fair value Gap and then end up

holding the inverse free value Gap

that's going to give me confidence that

the draw on liquidity is higher so going

down to the one minute we have this big

fair value Gap here notice if I was to

draw on right here right and I can see

okay we have this big fair value Gap but

we sweeps we swept internal cells out

but we didn't sweep external you know I

would want to see if I'm bearish I want

to see us hold this but once we break

above this right and we break above this

with volume

I start to get more of a bullish bias my

my draw in liquidity is now going to be

that previous high so I want to see us

continue to respect this inverse free VI

Gap and once we do continue to hold this

the draw on liquidity then becomes

higher in my bias and in my opinion and

this is a great way that I use

inverse-free value gaps to understand

what the potential draw on liquidity is

so here's another example right just

looking at this chart right here you can

see how many inverse for Value gaps

actually end up playing out so we

actually start bearish right and we have

you know kind of a bearish fair value

Gap right here notice once we come back

up to this I would want to see this you

know get respected back to the downside

once I see that this actually comes back

up what would I want to see happen when

we revisit this for Value Gap I want to

see this now act as support notice once

we break through this bearish fair value

Gap with strong volume we then end up

retracing again of course back to

Discount right we go back to Discount

and end up respecting that past fair

value Gap and then end up seeing new

highs back to where we were before right

so there's a lot of times where we can

use inverse for Value gaps here's

another one

right here once we get this initial

bounce again if I'm bearish I want to

see this get respected but I'm not

bearish because we just ended up

bouncing on this inverse for Value Gap

I'm bullish so if I'm bullish I want to

see all of these bearish for Value gaps

get disrespected I want to see as I want

to see them get just absolutely ran

through and then when we come back to it

I want to see them act as support notice

we come up break through this bearish

fair value Gap and then it acts as

support for now in this bullish fear

backup as well and then we and then we

go see higher a lot of different ways

that you could use inverse for Value

gaps notice here we have a bearish fair

value Gap when I see up I'd want to see

it get respected right when it doesn't

get respected look where we come back to

and look where we bounce come to the

right go right back to this inverse free

value Gap right when we broke through it

end up supporting it there's a lot of

ways that you can use this right the

best way I like to use it is as my bias

if I can't seem to understand what the

draw and liquidity is look what fair

value gaps are getting respected and

which ones are getting disrespected are

bullish for Black Ops getting respected

are bearish for Value cups getting

respected and our inverse forever I got

showing strength and in what direction

are they showing strength right

here's another example of an inverse

survey Gap right we have clear buy side

up here once we get this big drop to the

downside I would I would look to see if

this fair value Gap is going to be

respected towards the downside right

notice we end up coming up and we end up

breaking through this what do we now

want to see this as we want to see this

now act as support to Target whatever

that buy side level is right so you can

see right when we end up disrespecting

this we break through this fair value

Gap I want to now see us come back to

this show support show respect to this

level and then go towards whatever that

draw and liquidity is that we'd you know

be expecting for the specific example

it'd be that previous high right so we

break through this big volume come back

into this inverse free value Gap end up

getting bought back up targeting that

buy side level now right when this buy

side levels hit now what am I I'm

bearish so I want to see all these

bullish fair value gaps get disrespected

notice same thing I draw in bearish for

value or a bullish verb I got notice I'm

not worried about this because

liquidity's been swept once we break

through this that gives me confirmation

we probably want to go lower notice what

happens when we come back to this level

perfectly to the tick to the tick one

two and then ends up selling right back

off towards Lowe's right inverse for leg

UPS such a powerful tool let's look at

some more here's another example right

so we have kind of a clear downtrend

here again bigger time frame we have

kind of a clear downtrend now we have a

resting by or sell side right we have

kind of relative equal lows here now

what would I look to see if I'm bearish

well I want to see you know bearish for

like apps get respected and I want to

see bullish for bike UPS get

disrespected well I can see we kind of

have some bearish for bike apps up here

notice we come up we've been rejecting

this right we kind of have internal

break of structure but notice we have

kind of these this big bullish for Value

Gap now well what would I want to see

happen I don't want to see this right

notice we come down continue to respect

this bounce up one more time respect the

bearish fair value Gap right so that's

kind of giving me an understanding we're

in this range buy side up here sell side

up here what do I think is the drawn

liquidity notice what fair value gaps

are getting respected which ones are

getting disrespected bearish for

everybody Gap getting respected many

times one two three continuing to reject

look how we come down and we stop

respecting this inverse for Valley Gap

anymore what can I expect I can expect

for us to come back to this fair value

Gap respect it and then meet sell side

Notice come up we respect this bearish

Fair Valley Gap once we break through

this bullish fair value Gap we stop

respecting this fair value Gap we end up

bouncing right back to it respect it

acts as resistance now acts as

resistance and then we end up selling

off sweeping out that sell side level

that we had down there

so there's a lot of ways you can use

inverse fair value gaps a lot of it just

takes experience right the best way I

like to use it and I think what is most

valuable that people don't really use

them for is recognizing strength and

weakness and giving you a better sense

of what the draw on liquidity is going

to be using them in context like this is

going to be super helpful building

confidence on what you think the draw is

and overall just building confidence in

your trading strategy in general so let

me know if this video helped you guys in

any way let me know if you're going to

start using these in your trading

strategy and be hyped for more videos to

come so leave a comment make sure to

subscribe make sure you like the video

and I'll see you guys in the next one

peace