Chapter 2 lesson 4 - Imbalances

Question 1

What is an imbalance?

Answer 1

An imbalance is 1 sided price action which is usually caused by displacement.

Question 2

What is significant about imbalance?

Answer 2

Imbalances always need to be rebalanced as the market needs to provide equal buying and selling opportunity.

Question 3

How should we use imbalances in our trading?

Answer 3

Use your fib tool to mark out the 50% mark of the imbalance. If price rejects of the 0 - 50% area, then it’s an indication that price will reverse from this point.

In imbalance that lines up with an order block is a higher probability FVG, especially if the CE lines up with the open of the order block.

NB, the full imbalance does not need to be rebalanced. Partial imbalances are fine as well.

Question 4

What is the mid point of a FVG called?

Answer 4

The consequent encroachment(CE).