Everything you need to know about Fair Value Gaps.

Summary

This video script delves into the concept of Fair Value gaps in trading, distinguishing between good and bad gaps and their implications for profit. It emphasizes the importance of understanding targets, unmitigated opposing PD arrays, and the strength indicated by different types of gaps. The script guides traders on identifying the 'perfect' fair value gap for trading, suggesting case studies for practical understanding and highlighting the nuances of entry confirmation and risk management.

Takeaways

• 📈 Fair Value Gaps can be profitable but require understanding of their types and characteristics.
• 🔍 The direction of trade is determined by the first line of defense, ideally the fair value gap at the time of retracement.
• 🎯 Identifying the 'Target' is crucial; it's on the left side of the chart and trading occurs from the right, focusing on the most recent price action.
• 🏁 Fair Value Gaps are created at unmitigated opposing PD arrays, indicating areas of resistance or support that have not yet been traded into.
• 💪 Fair Value Gaps signify strength and intention in the market, showing the direction larger entities are moving the market.
• 🌟 The type of Fair Value Gap is determined by the third candle's action: a rejection, consolidation, or expansion indicates varying market strength.
• ❌ Rejection Fair Value Gaps (RFG) show significant opposing strength and require more confirmation before trading.
• ✅ Perfect Fair Value Gaps (PFG) display a balance of strength, indicating minimal opposing force and are ideal for trading.
• 🚀 Breakaway Gaps show strong bullish or bearish strength without a retracement, making them more challenging for entry and risk management.
• 🔑 Entry confirmation is vital, especially with RFGs, and involves looking at lower time frames for additional signals.
• 📚 Conducting a case study on various instruments and time frames to understand which Fair Value Gaps hold and which don't is recommended for gaining experience.

Q & A

What is the main topic of the sixth video in the MMC series?

The main topic of the sixth video in the MMC series is understanding Fair Value gaps and the different types of Fair Value gaps in trading.

What is the significance of the first line of defense in the context of the video?

The first line of defense refers to the initial point of resistance or support when creating a retracement, ideally being the fair value gap that traders are looking to trade from.

What is meant by 'Target' in the script?

The 'Target' in the script refers to a specific price level on the left side of the chart that traders aim to reach, using the most recent price action and fair value gaps on the right side for trading decisions.

How are fair value gaps created according to the video?

Fair value gaps are created at unmitigated opposing PD arrays, which are areas of price resistance or support that have not been traded into before.

What does 'unmitigated' mean in the context of fair value gaps?

'Unmitigated' means that the price level has not been traded into or tested by the market since the fair value gap was created.

What is the difference between a good and bad fair value gap?

A good fair value gap is one that shows strength and intention from larger market entities, while a bad fair value gap may indicate a lack of strength or a false signal that could lead to a loss in trading.

What is an 'expansion phase candle' in the context of fair value gaps?

An 'expansion phase candle' is the second candle in a fair value gap formation that closes above the high of the first candle, creating the potential for a fair value gap.

What are the three types of third candles that determine the quality of a fair value gap?

The three types of third candles are the rejection third candle, the consolidation third candle, and the expansion third candle, each showing different levels of market strength and intention.

Why are rejection fair value gaps (RFGs) considered the worst to trade from?

Rejection fair value gaps (RFGs) are considered the worst to trade from because they show too much bearish strength after the creation of a fair value gap, indicating a high probability of the market continuing in the opposite direction.

What is a 'perfect fair value gap' (PFG) and why is it considered the best to trade from?

A 'perfect fair value gap' (PFG) is a fair value gap with a consolidation third candle, showing a balance between bullish and bearish strength, making it the best to trade from as it indicates a high probability of the market continuing in the intended direction.

What is a 'breakaway gap' and how is it different from other fair value gaps?

A 'breakaway gap' is a type of fair value gap characterized by an expansion third candle, showing strong bullish or bearish strength without a retracement. It is different because it often occurs when the market has not yet reached a significant resistance or support level (PD array), suggesting further price movement before a retracement.

Why is it recommended to do a case study on fair value gaps?

A case study on fair value gaps is recommended to gain a deeper understanding of which gaps hold and which do not, and to practice identifying and labeling different types of fair value gaps in various market conditions.

Outlines

00:00

📈 Understanding Fair Value Gaps for Trading

This paragraph introduces the concept of Fair Value gaps and their significance in trading for profit. It distinguishes between good and bad Fair Value gaps, emphasizing the need to identify them correctly. The paragraph also explains the importance of the first line of defense, the ideal fair value Gap, and the concept of unmitigated opposing PD arrays. It uses the example of Canadian dollar JPY to illustrate trading towards a target using the most recent fair value Gap and order flow lag.

05:02

🔍 Identifying Targets and Fair Value Gaps

The second paragraph delves into the specifics of identifying targets and fair value gaps. It explains that targets are on the left side of the chart and trading occurs from the right, using the most recent price action. The paragraph further clarifies how fair value gaps are created at unmitigated opposing PD arrays, which are resistance areas that can lead to rejection and the formation of new fair value gaps. It also discusses the importance of understanding the strength and intention behind market movements by larger entities, as indicated by fair value gaps.

10:03

📊 The Anatomy of Fair Value Gaps

This paragraph breaks down the anatomy of fair value gaps, explaining the three types of third candles that can form after an expansion phase candle. It describes the rejection third candle (RFG), which shows too much opposing strength, the consolidation third candle, which is a sign of a balanced fair value gap, and the expansion third candle, which indicates strong bullish or bearish strength. The paragraph uses examples to illustrate how these gaps can affect trading decisions and the importance of entry confirmations.

15:03

🚫 Avoiding Rejection Fair Value Gaps

The fourth paragraph warns against trading from rejection fair value gaps (RFGs), which show significant bearish strength and can lead to continued lower prices. It advises seeking more confirmation before trading from these gaps and uses the gold chart as an example to illustrate the concept. The paragraph also discusses the importance of understanding the difference between a rejection and a perfect fair value gap, especially when considering entry points and risk management.

20:04

🌐 Capitalizing on Perfect and Breakaway Gaps

The final paragraph discusses how to capitalize on perfect fair value gaps (PFGs) and breakaway gaps. It describes PFGs as the best to trade from, showing little to no opposing strength and offering a good balance for continuation of the trend. Breakaway gaps, on the other hand, require more experience to trade effectively and should be approached with caution. The paragraph suggests studying which fair value gaps hold and which do not through a case study, using a tool provided in the description for analysis.

Keywords

💡Fair Value Gap

A 'Fair Value Gap' is a concept used in trading to identify a price level that the market perceives as the 'fair' or true value of an asset. In the video, it is the central theme, explaining how different types of fair value gaps can be used to predict future price movements. For instance, the script mentions 'good fair value gaps' and 'bad fair value gaps', indicating that not all gaps are equally useful for trading decisions.

💡Target

In the context of the video, 'Target' refers to a specific price level that traders aim to reach or consider significant in their trading strategy. The script discusses how the 'Target' is usually on the left side of the chart, and trading decisions are made from the right side, using the most recent price action and fair value gaps to guide the approach towards the 'Target'.

💡Orderflow Lag

'Orderflow Lag' is mentioned in the script as a reference to the delay or time gap between the actual price movement and the order flow, which is the total of all orders placed by market participants. It is used to identify fair value gaps and is crucial for understanding the recent market sentiment and potential future price action.

💡Unmitigated

'Unmitigated' in the script refers to a price level or area that has not been traded into or challenged by the market. This concept is important because it helps traders identify potential resistance or support levels that have not yet been tested, such as 'unmitigated opposing PD arrays', which are significant for creating new fair value gaps.

💡PD Arrays

PD Arrays, or 'Price Discount Arrays', are used in the script to describe areas of accumulated buying or selling pressure that act as support or resistance levels. 'Opposing PD Arrays' are particularly important as they represent the opposing force to the current trend direction and are key in identifying fair value gaps.

💡Expansion Phase Candle

An 'Expansion Phase Candle' is a specific type of candlestick pattern mentioned in the script that signifies a strong move in the market. It is characterized by the closing price being above the high of the previous candle, indicating bullish momentum. This pattern is crucial for identifying the creation of a potential fair value gap.

💡Rejection

'Rejection' in the script refers to the market's response when it encounters a significant price level, such as a fair value gap or resistance level. If the price moves away from this level, it is said to be 'rejected', indicating a potential change in market sentiment or strength. The script uses this term to differentiate between good and bad fair value gaps.

💡Consolidation

Consolidation in the context of the video is a period of price movement where the market is moving sideways, indicating a balance between buyers and sellers. The script describes a 'consolidation third candle' as a sign of a 'perfect fair value gap', where the market has enough strength to create a retracement but not enough to reject the fair value gap fully.

💡Breakaway Gap

A 'Breakaway Gap' is a type of fair value gap described in the script that occurs when the market gaps away from a resistance or support level without retracing back to it. This indicates very strong bullish or bearish momentum. The script advises that these gaps can be traded but require more experience and careful consideration.

💡Entry Confirmation

'Entry Confirmation' is a term used in the script to refer to additional signals or indicators that a trader might look for before entering a trade. It is particularly important when dealing with fair value gaps, as it helps to ensure that the trade is aligned with the overall market conditions and increases the probability of a successful trade.

Highlights

Fair Value gaps can be profitable but require understanding the difference between good and bad gaps.

The importance of identifying the target on the left side of the chart when trading from a fair value gap on the right.

Fair Value gaps are created at unmitigated opposing PD arrays, indicating areas of resistance or support.

Unmitigated means the price has not traded into the area before, maintaining its strength as a resistance or support level.

Opposing PD arrays are significant in identifying where fair value gaps are likely to form and act as resistance.

A fair value gap signifies the strength and intention of larger market entities moving the price.

The three types of fair value gaps are identified by the third candle's action: rejection, consolidation, or expansion.

A rejection third candle shows a large down candle, indicating bearish strength and a potential poor fair value gap to trade from.

A consolidation third candle represents a balanced fair value gap, showing little bearish strength and a good opportunity to trade.

An expansion third candle, or breakaway gap, shows strong bullish strength but may be difficult for entry and risk management.

The significance of respecting unmitigated opposing PD arrays when trading from a fair value gap.

How to identify and trade from perfect fair value gaps (PFG) which show minimal opposing strength and are ideal for trading.

The potential for a breakaway gap to continue the trend before reaching a significant PD array or target.

The importance of trading breakaway gaps with caution and gathering experience with other types of fair value gaps first.

The recommendation to conduct a case study on various instruments and time frames to understand which fair value gaps hold and which do not.

The use of study notation to label and analyze fair value gaps in practice, enhancing understanding of their behavior.

The emphasis on the universal applicability of fair value gap analysis across all time frames from minute to yearly.

Transcripts

Now Fair Value gaps can bring you a lot

of profit but you need to understand

that not every fair value Gap is the

same you have good fair value gaps and

bad fair value gaps and that's exactly

what we are going to go over in the

sixth video of the MMC series we're

going to touch on Fair Value gaps and

the different fair value gaps that we

also have in the first slide I want to

revisit the previous video that we had

about narrative where we touched on the

first line of defense so the first PD

rate that we run into when we create a

retracement is ideally the fair value

Gap that we have sitting right there

this is focusing on that we already have

the direction that we are now looking at

a fair value Gap to trade from and we

know based on the previous video as well

that ideally we want to see the flot

being a fair value Gap but within that

we still have different types of fair

value gaps so moving on we start off

with a Target if we want to understand

if we are trading from a good fair value

Gap then we first of all need to

understand what the target is so what do

I mean by that the target is going to be

on the left side and we trade from the

right what do I mean by that well if we

take a look at this example right here

then we see we have a Target on the left

side that Target is not within the

current orderflow lag that we are

trading and if we are looking to trade

towards that Target we are going to use

a fair value Gap sitting right there on

the right side in the most recent price

action so we're always talking about the

most recent orderflow lag and the most

recent fair value gaps as well so to

show you an example here on Canadian

dollar JPY on The Daily time frame we

have this fair value Gap right there

that we are looking to trade from and we

have a Target towards the left right

there in the form of those swing points

and those Sur Val gaps that we talked

about in earlier videos that is towards

the left because that is going to be our

Target so whenever I refer to the right

side of the chart I always refer to the

most recent order flow lack all right so

once we have that Target on our chart we

also need to understand where do fair

value gaps actually get created fair

value gaps get created at

unmitigated opposing PD arrays now what

does that mean here in this example we

have a lot of candles and at the top

right there we have that swing High

let's say the previous price action was

point so we had bullish price action and

we could argue that we want to trade

into that swing high right there so that

is our main target on the way to that

Target we will encounter unmitigated

opposing PD Ray what is that first of

all unmitigated stands for it has not

been traded into before so for example

on Canadian dollar JPY this fair value

Gap is now mitigated it is not

unmitigated anymore because we have

traded into it right there but this fair

value gap for example is unmitigated

since there was no price action there

was no trading inside that fair value

Gap but this fair value gap for example

is unmitigated because after the fair

value Gap was created we did not trade

back into it just yet this can also be

said about swing highs or swing lows so

for example this swing High has been

traded back above now it's mitigated but

this swing high right here is

unmitigated this is extremely important

to understand otherwise you're going to

lose a lot of accuracy and we're not

going to be on the same page anymore so

for example this fair value right here

is unmitigated as we continue higher but

as soon as we come down and with that

first candle right there the smallest

price movements inside this fair value

Gap that has been created now it is

mitigated so we don't use it anymore now

that's the unmitigated part then we move

on to opposing PD Rays what are opposing

PD Rays well if we continue higher and

we are bullish discount arrays are going

to be holding we have discount arrays as

order flow lags so if the trend is

bullish and discount arrays are holding

that means premium arrays are the

opposing PD arrays so in this example we

have this fair value Gap sitting right

there which is an unmitigated opposing

PD rate if we want to continue higher

also known as resistance this fair value

Gap is going to resist us from reaching

that Target right there so when we trade

back into that right there since it is

resistance we can expect some kind of

rejection now whether the rejection is

very big or very small that's what

determines what type of fair value Gap

it's going to be but at those

unmitigated opposing PD Rays that's

where we create new fair value gaps now

we have another unmitigated opposing PD

and that is this swing high sitting

right there so when we trade into that

that is exactly where we can expect a

rejection that resistance area creates a

rejection and that rejection creates a

new fair value Gap right there that we

can continue higher off of so if we

again take a look at Canadian dollar JPY

we have this as our main target this

intermediate term low on the way there

we will see that we have a few

unmitigated opposing PD rays in the form

of this swing low for example when we

continue lower create this expansion

phase candle the second candle of the

fair value Gap the third candle stinks

into that the fair value Gap gets

created at that unmitigated opposing PD

Ray that resistance area then causes a

rejection and that caus the retracement

to sting back into the F Val Gap to then

continue lower now that's quite a lot

going on we're going to break that down

fully so you can easily understand it so

the important part is to understand

unmitigated opposing PD rat that they

act as resistance for Price action when

we run into that resistance that can

create a rejection which can create a

fair value Gap to then continue higher

or continue lower that is where fair

value gaps get created now first we need

to understand the basics of a fair fair

value Gap a fair value Gap is a sign of

strength and intention when I mention

strength or intention I mean the same

exact thing there are bigger entities

trading the markets that we also trade

with a lot of lots with a lot of money

on the line they can move the market so

when they move the market they can't

simply hide that and what happens when

they move the market they create fair

value gaps so they show the intention of

what price actually wants to do they

show the strength now there's three

options and each three show different

types of strength first of all what

we're seeing on the left right here is

two candles so we need one more candle

the first candle of any fair value Gap

can either be a down candle an up candle

consolidation doesn't really matter the

second candle if we are talking about a

bullish fair value Gap is an expansion

phase candle an expansion phase candle

means that it closes above the previous

candle high right there so above the

first candle high and since it closes

above the first candle High it creates

the future potential fair value Gap in

the form of this area right here so this

whole gray box is where we can

potentially see a fair value Gap then

the second candle that candle is called

the expansion phase candle and now

depending on what the third candle will

do that will determine what type of fair

value Gap we have a good fair value Gap

or a bad fair value Gap the first option

is the following a rejection third

candle now what does a rejection third

candle looks like well first of all

where does a fair value Gap again

potentially get created that unmitigated

opposing PD right there like we're

seeing in the example now that

unmitigated opposing PD is also a

previous Target of course because we're

always moving towards those PD Rays so

once we reach that Target we want to be

a little bit more careful and see what

we want to do right there because the

third candle of this new fair value Gap

that could be created could be a

rejection third candle like we're seeing

right here now why is this a rejection

third candle because we saw how big the

fair value Gap could potentially be with

the gray box that we just saw now we

take away all that potential fair value

Gap and we create a large down candle

actually rejecting lower now what is the

thought process behind this well if we

want to continue higher right here then

we should have quite a lot of bullish

strength right and if that fair value

Gap was supposed to be quite big but all

of a sudden now turns into a very small

fair value Gap that tells us that

there's also quite a lot of bearish

strength in the market and this is not

good now we'll go more in depth on this

later on then the second type of fair

value Gap that we can have is the

consolidation third candle where the

third candle is a consolidation right

there this is the perfect fair value Gap

then the third type of fair value Gap

that we can have is an expansion third

candle so when we were talking about the

second candle of a fair value Gap always

being an expansion phase that same exact

thing happens but now on the third

candle again these three options show

different types of strength where this

one shows a lot of bullish strength the

consolidation shows still a lot of

bullish strength because we have created

a fair value Gap but just enough bearish

strength to create a consolidation and

to create a retracement the rejection

third candle shows too much strength to

the opposing side and of course when we

are looking for bullish prices we don't

want the bearish S to be extremely

strong because that can lead to either

consolidation or can lead to lower

prices which of course if we want higher

prices not something we want to see so

let's dive into these different third

candles right there these different type

of fair value gaps where the first one

is again the rejection third candle now

just for Simplicity sake and just so we

know what we're talking about I've named

it an rfg rejection fair value Gap now

when we see this three candle pattern we

want to of course go over have we ran

into one of those unmitigated opposing

PD Rays because if we did then we can

also see that we are actually respecting

that opposing PD

which tells us that there is some

bearish strength in the market now this

is the worst FG to trade from shows too

much bearish strength and of course we

can just simply inverse it if we're

talking about a bearish fa Gap and

there's too much bullish strength like

we mentioned usually comes from an

unmitigated opposing PD Ray when we have

an rfg like this we want to make sure

that we require more confirmation so for

example if this is a daily fair value

Gap and we want to go into the 15minute

time frame eventually for our entry

confirmation then we want more

confirmation than usual because this is

a sign that we might just actually

continue lower instead of continuing

higher even though there's a fair value

Gap right there because something like

this might just happen where we actually

create a new down candle and we just

simply continue lower disrespecting the

bullish fair value Gap now there is a

lot of beautiful examples right right

here on the gold chart then if we pay

attention to those unmitigated opposing

pays here we have this swing high right

there this is something when you start

paying attention to it it will happen

extremely often when we reach a high

like that and we are respecting that

high right there based on candle science

that means that we are potentially

sweeping that high because we are

wicking it when we have a sweep like

this coming back into to a fair value

Gap right there that is not the ideal

scenario that makes this daily for Value

Gap already lower probability to trade

from because when we have a sweep like

that we can actually look to continue

lower instead so the bullish fair value

Gap doesn't have a lot of significance

anymore it has more significance before

we reach that

high so since we are respecting that

high we can expect a lot of bearish

strength in the market as well so as a

general rule thumb fair value gaps that

are being traded back into when coming

off a sweep like this those are not good

fair value gaps they can hold but you

would want to see more confirmation

because the retracement into the fair

value Gap tends to be a little bit

deeper than normal now if we then

continue lower and we understand that

this is also a bigger fair value area

right so if we're not offering fair

value anymore we could potentially be

seeking liquidity so these lows right

here the low of this bigger fair value

area could be the Target on the way

towards that low we will see that we

have this fair value Gap right here

which also creates this fair value Gap

that we sting back into now here we

don't have a big rejection higher I

would argue but if we take a look at

this scenario where we have this fair

value Gap sitting right here look at the

difference in the rejection from this

fair value Gap back to this fair value

Gap and from this fair value Gap back to

this fair value Gap right here we could

have created a full fair value Gap like

this right here this big but only about

what is it not even 25% of the potential

fair value Gap is actually created right

there creating an extremely big

rejection higher since the rejection is

so big there's a lot of bullish strength

in the market as well so we can actually

expect a deep retracement or even higher

prices this is not a good fair value Gap

to trade off of right there and if we do

want to continue lower we would want to

see more confirmation now what more

confirmation is is something that will

dive deeper into when we get to entry

confirmations these are fgs is the ones

we want to watch out for where the

rejection is very big because these are

the worst fair value gaps to trade from

now moving on to a better fair value Gap

is the consolidation third candle I just

labeled this one as the PFG the perfect

fair value Gap it all starts again with

that PDR that we have towards the left

right there now we could argue we are

still respecting that because we are

wicking it but the rejection in the

third candle right there is not as big

to continue lower this means the

following this is the best FG to trade

from it shows little to no bearish

strength and of course if we inverse it

again shows little to no bullish

strength

when we have a fair value Gap like this

this means that we have a perfect fair

value Gap we see that the potential of

the fair value Gap was large the

expansion phase candle that second

candle and also it created a very big

fair value Gap this shows that in that

third candle there was enough bearish

strength to create a retracement into

the fair value Gap like we see right

there but not enough bearish strength to

create a full rejection so if it helps

we could put this into a percentage here

we could argue we are 80% with the

bullish strength 20% with the bearish

strength where we still create a

retracement enough of a retracement to

sting into the value Gap to then

continue higher whereas in with the

rejection fair value Gap we are more

like 60% bullish and maybe 40% bearish

and that's why we create such a big

rejection now the closer the bullish and

the bearish percentages are to each

other so if they are 50/50 that of

course means that we have a

consolidation so we want to find the

perfect balance in that so on Canadian

dollar JPY we see right here we have

this as our main target like we already

discuss the fair value gets created

based off a rejection that we have right

here at that swing low we could make the

argument that this is somewhat of a big

rejection so if we go down time frames

into the four our time frame then we

could wait for another fair value Gap to

continue lower instead more confirmation

now what do we see right here we get

this fair value Gap right there does not

necessarily get created at the opposing

PD ra right there but we have a perfect

third candle consolidation right there

which means we can sting into it to then

simply continue lower but if we now

confirm this again into the 1 hour then

we see off of the 4H hour fair value Gap

we also create

this 1H hour fair value Gap right there

at a previous unmitigated opposing PD

Ray which causes the retracement the

third candle being a consolidation which

we can then perfectly fine continue

lower from these fair value gaps are the

perfect fair value gaps hence the name

PF now after the PFG we have one more

type of fair value gap which we have to

understand because these are also very

common and that is the expansion third

candle also known as a breakaway Gap the

back right there now with the Breakaway

Gap right here there's a difference with

the previous two examples that we have

for the perfect fair value Gap and the

rejection fair value gap on where we

want that opposing unmitigated pdate to

be because here ideally we don't want to

see that we have reached that Target

just yet now we'll dive into why this is

not the worst and not the best fair

value G to trade from it shows a lot of

bullish strength so if we're talking

about that strength this could be 100%

bullish strength but is a 100% bullish

strength always what we want we could

argue and logically speaking yes of

course we want that but when there's too

much strength on one side and we

actually don't create a retracement then

it makes it more difficult for entry and

for the risk management so yes it's good

to still trade off of it but it makes it

a little more difficult because now you

deal with a lot of different variables

as well how far can we retrace what is a

good fair value up on the lower time

frame where can we place our stop- loss

there's a lot more going into it whereas

in the perfect fair value Gap is a lot

easier a lot simpler to trade off of now

when we talk about this Breakaway Gap we

want to do the following we want to make

sure that we only trade it if the

unmitigated opposing PD has not been

reached just yet why is that because

then it it still has room to continue

higher whereas if we reach that PD Ray

right there then like we saw with the

perfect Val Gap or the rejection fair

value Gap we can create a bigger

rejection we can create that fair value

Gap to then continue higher so we can

actually expect price to reject a little

bit but if we have not reached a PD rate

just yet we can expect price to still

continue higher a little bit before we

create any rejection now we can

capitalize on it through the following

we can go down time frames and find a

new fair value Gap to capitalize on the

understanding that the next candle will

most likely reach that PD Ray very

similar to what we went over in Candle

signs we understand the next candle is

most likely going to be a bullish candle

until we reach that PDR so if on one

time frame that's a singular candle we

can go down time frames to find the

order flow lag that will take us there

and then essentially it's the same

thought process because then again we

look it's a rejection Sur Gap is it a

perfect Sur Gap or a breakway gap now

this will look something like the

following where the next candle is just

a bullish up candle right there

continuing the trend now if we take a

look at US Dollar Canadian Dollar on The

Daily time frame here we see that we

have this as our main target the highest

swing point then before we reach that we

actually have this swing point and this

swing Point as well that will act as

that resistance those unmitigated PD

Rays now the important part that we see

as well if we compare compare it to

those perfect fair value gaps and also

those rejection fair value gaps we do

not create a rejection of those previous

resistance areas now with that

understanding and understanding that we

can still continue higher towards this

swing high right there whilst not

creating a rejection that indicates that

these right here are actually Breakaway

gaps where most likely we can already

deliver higher towards the Target that

we have right there before we create a

bigger retracement so if we go down time

frames and we look at this area before

we reach the highest swing point right

there then we will see on the 1 hour

right here we run into this resistance

area this resistance area actually gives

quite a big rejection I would argue on

the 1 hour but afterwards it creates a

new fair value Gap right here a new

order flow lack to continue higher from

and this is then a fair value Gap that

we can again simply trade off of to then

continue higher and afterwards we create

even new F gaps right there and a small

F Gap sitting right there which we can

look to continue higher from to

eventually reach the main target that we

had right there that is how we can

capitalize on a breakaway Gap now

capitalizing on Breakaway gaps is a

little bit more difficult requires in my

opinion a little bit more experience as

well so if you're just starting out and

focusing on Fair Value gaps then just

focus on the perfect fair value Gap

because this again again is the best fvg

to trade from and I want to emphasize on

the fact on any given time frame so from

the one minute to the yearly time frame

it does not matter this is the easiest

fair value Gap to capitalize on

especially when you're just starting out

breakway gaps are just a little more

difficult so first gather experience

with fair value gaps then eventually you

can look into Breakaway gaps as well the

rejection fair value gaps that we have

you can simply avoid so only focusing

right now on these perfect fair value

gaps as our first line of defense this

is then what we can trade from

eventually and where we can use our

entry confirmation now I highly

recommend doing a case study because

you'll never truly understand Concepts

if you don't do a case study so the case

study for this video is study which Fair

Val gaps hold and which ones don't and

then label them so what I mean by that

go into any instrument let's say the

dollar right here go into any time frame

so let's pick the 15 minute simply Mark

out all the fair value gaps that we had

in recent price action right there then

see off of which fair value gaps we

actually followed through meaning we

actually continued lower and created new

fair value gaps right there see where

they get created as well and then start

labeling them so is it a rejection fair

value Gap is it a perfect fair value gap

or is is it a breakway gap you can again

use the study notion that I made

completely for free it's in the link in

the description all right perfect thank

you