Liquidity & Confluence

Fair Value Gaps

Use imbalance zones carefully as context, not automatic entries.

7 min read
Video coming soon

A fair value gap is an imbalance left by a fast move where price did not trade evenly through an area. Traders often mark the gap as a possible retracement zone because price may return to rebalance part of the move.

The gap is context, not an automatic entry. A gap in the direction of higher-timeframe trend may support continuation if pullbacks hold. A gap into a major opposing level may be less reliable. Location and structure decide whether it matters.

Use fair value gaps with risk rules. Define which part of the gap you expect to hold, where the idea is invalid, and what confirmation is needed. Avoid stacking multiple imbalance labels until the chart becomes impossible to read.