How do ( FVG, OB, RB ) work?

Summary

This video script introduces three essential tools for market analysis: liquidity, volume, and inefficiencies. It explains how these elements shape market movements and discusses the concept of Fair Value Gap, Order Block, and Rejection Block as key price action elements. The script emphasizes the importance of understanding market states, price delivery efficiency, and the manipulative nature of order blocks, providing insights into how these tools can be used for effective market analysis.

Takeaways

• 📈 Market movements can be understood through three main elements: liquidity, volume, and inefficiencies.
• 💧 Liquidity is the primary driver of the market, as it represents the presence of buy or sell orders.
• 📊 Volume reflects the amount of liquidity entering the market, indicating the flow of money.
• 🔍 Inefficiencies are graphical representations of volume at specific times, showing the impact of volume on price.
• 🧩 The market can be in a balanced or unbalanced state, affecting the dominance of buyers or sellers.
• 🔄 Efficient and inefficient price delivery are determined by the presence of buyers and sellers and the evenness of asset exchange.
• 🌐 The Fair Value Gap (FVG) is a Price Action tool indicating impulsive price reactions to zones of liquidity or inefficiency.
• 📌 FVG levels, including the 0.5 level, can be used as entry points for trading positions based on price reactions.
• 🚀 An Order Block represents a price range with high trading volume, often formed manipulatively and can trigger price reactions when tested.
• 🚫 Rejection Blocks, similar to Order Blocks, show changes in market balance and can indicate potential reversals or continuations of trends.
• 🔗 All market movements are interconnected, moving from one zone of interest to another, reflecting the 'from zone to zone' rule.

Q & A

What are the three main tools for market analysis discussed in the video?

The three main tools for market analysis discussed in the video are the Fair Value Gap (FVG), the Order Block, and the Rejection Block.

What is the role of liquidity in the market according to the video?

Liquidity is the sole driver of the market. Without liquidity, meaning without buy or sell orders, the market would not move.

How does volume reflect the amount of liquidity entering the market?

Volume directly reflects the amount of liquidity entering the market, indicating how much money has entered.

What is meant by inefficiencies in the context of market movements?

Inefficiencies are graphical representations of volume at a specific moment in time, influenced by volume on price, and are used as tools for market analysis.

What are the two main factors to consider when understanding the deep logic of inefficiencies and market movements?

The two main factors are the state of the market at a certain point in time (balanced or unbalanced) and the efficiency of price delivery (efficient or inefficient).

What is a balanced market state and how does it affect price movement?

A balanced market state is when the volume of buys and sells are equivalent, and the price hardly moves, indicating neither buyers nor sellers dominate the market.

What is a Fair Value Gap and how does it form in a bullish scenario?

A Fair Value Gap is a Price Action element formed by three candles where the high of the first candle does not cover the low of the third candle, indicating an impulsive price reaction due to a surge of liquidity.

What is the significance of the 0.5 level in a Fair Value Gap?

The 0.5 level in a Fair Value Gap is often marked as quite strong, and ideally, the price should bounce off it, which can also be used as an entry point for a position.

How does an Order Block differ from a Rejection Block in terms of formation?

An Order Block is formed by a breakout of resistance or support levels and a close above or below it, respectively, while a Rejection Block is identified by two candles with a range of interest in the wicks, indicating a change in balance between market participants.

What is the 'from zone to zone' rule mentioned in the video?

The 'from zone to zone' rule describes the logic that the price always moves from one zone of interest to another, such as from liquidity to inefficiency and vice versa, or from internal liquidity to external liquidity.

Why might the price react when testing an Order Block zone?

The price might react when testing an Order Block zone due to initial positions being closed, unfilled orders after testing, and the zone itself being a balance change point attracting additional position accumulation or distribution.

How are Rejection Blocks identified on a chart?

Rejection Blocks are identified by two candles with the area of interest being the range of the wicks of both candles. It signifies a change in market balance and can be used for analysis regardless of the wick lengths.

What is the final conclusion about inefficiencies presented in the video?

The final conclusion is that any inefficiency on the chart represents areas where orders were left unfilled or partially filled by market participants during price movement, and it's important to analyze these to understand market dynamics.