1. Introduction to Imbalance
Financial markets are driven by the matching of Bid and Ask orders. In a perfectly balanced (Efficient) market, candles move smoothly, and wicks overlap neatly.
However, when Smart Money (Central Banks, Hedge Funds) injects billions of dollars into the market at once, retail liquidity cannot absorb it fast enough. This causes a violent price surge, leaving a "void" or "gap" on the chart. This phenomenon is known as an Imbalance or Fair Value Gap (FVG).
2. Anatomy of FVG (BISI & SIBI)
An FVG is not a weekend market gap. It is an internal gap created by a strict 3-Candle Formation.
BISI (Buyside Imbalance)
Occurs in an uptrend: Look at a 3-candle sequence. If the "High of Candle 1" fails to touch the "Low of Candle 3", the empty space in Candle 2's body is a BISI (a strong Demand zone).
SIBI (Sellside Imbalance)
Occurs in a downtrend: If the "Low of Candle 1" fails to touch the "High of Candle 3", the gap in Candle 2 is a SIBI (a heavy Supply zone).
3. The Magnetic Effect (Fill the Gap)
Nature abhors a vacuum, and so does the financial market. The Interbank Price Delivery Algorithm (IPDA) is programmed to seek efficiency, meaning it will eventually draw the price back to "Fill the FVG".
FVGs act as "Magnets". Professional traders never FOMO into a massive green candle. Instead, they patiently set limit orders within the FVG, knowing the algorithm will magnetically pull the price back to restore equilibrium before continuing the true trend.
4. Confluence with Order Blocks
Trading every random FVG on a chart is a recipe for disaster. An FVG only becomes a "High-Probability Institutional Zone" when paired with Confluence.
Golden Rule: The best FVGs must occur simultaneously with a Break of Structure (BOS / CHOCH) and be backed by an Order Block (OB). An OB that leaves an FVG behind confirms that massive institutional volume was injected, validating the zone for a sniper entry.
5. Sniper Execution Strategies
- 1. The 50% Threshold (Consequent Encroachment): Institutions often place their resting orders precisely at the 50% midline of an FVG. If price taps the 50% mark and forms a rejection Pin Bar, execute the trade immediately.
- 2. Full Fill (100% Gap Closure): Sometimes, price pierces through the 50% level to completely fill the gap and tap the Order Block resting just behind it. This is the ultimate, safest location for your Stop Loss.
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