A form of smart money order mitigation. This is what creates what is known to many as โsupportโ & โresistance.โ This is a โfailure swing.โ
A mitigation block occurs when there is a high, a low, and a higher high. (Inverse for bearish)
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A breaker block is essentially a mitigation block that takes liquidity.
This is a โbreaker swing.โ We mark a breaker block using the last up close/or series of up close candles prior to an old low being swept. (Inverse for bearish)
FVG's are aggressive, one directional price movements that create a gap where there is an imbalance of buyers or sellers.
Price will often return to these imbalances to offer fair value.
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An order block represents a change in the state of delivery in the market. It is not simply every down-closed or up-closed candle. Order blocks act as a bookmark in price. A high probability ob takes liquidity & creates an FVG.
Areas where there is a concentration of buy or sell orders resting. Traders place stop loss orders around these swing points, and the market often targets them, providing the liquidity for larger market participantsโ orders.
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If price is drawing to a higher timeframe FVG, the one you are using will not hold. The higher timeframe FVG will act as a stronger magnet for price.
You must understand what price is doing from the top down.
The HTFโs: M, W, D, 4h act as the strongest magnets for price.
For example, if we are looking to trade off of a 1h FVG, but donโt know that price is currently drawing to an FVG on the daily, that 1h FVG is MUCH more likely to fail. This why many of your FVGโs do not hold.
A FVG is a 3 candle sequence where an imbalance of buyside or sellside forms. The key is that the wicks of the 1st candle and 3rd candle do not touch due to the 2nd candleโs large expansion. This creates a very visible gap.
Fair value gaps can occur on both sides of the market; on buy side and one sell side. FVGโs are also known as BISI and SIBIโs, below is an example.
To arrive at the draw on liquidity consistently we must first understandโฆ
Price is only ever doing 1 of 2 things:
- Seeking liquidity (ERL)
- Offering fair value (IRL)
ERL: External Range Liquidity
IRL: Internal Range Liquidity
Price cycles from ERL โ IRL. IRL โ ERL. ๐
In order to find ERL/IRL, we want to mark out our most recent price range. We do this by marking out the most recent swing low to swing high.. We do not worry about the โoldโ ranges to the left of the chart.