ICT & SMC Advanced Module

Lesson 07: Advanced Concepts - Imbalance, FVG, Displacement & More

1) Imbalance

For an Imbalance to form, the market must continuously buy or sell without stopping. That means the market should continuously buy or sell without retesting.

• Market must fill: After an imbalance is formed, the market must come back to fill it. Normally we say it should cover at least 25%.
• Buy Side Imbalance: Forms when the market continuously moves up.
• Sell Side Imbalance: Forms when the market continuously moves down.

2) Displacement

This is somewhat similar to Imbalance. Actually, not just somewhat - it's very similar to imbalance. Here, we call it displacement when the market moves fast and forms candles quickly.

• Otherwise: Without BOS or CHOCH, a displacement will never form.
• In the chart: You can see that the displacement formed while creating a BOS.

3) Fair Value Gap (FVG)

For an FVG to form, you need three candles. Here, if there's an unfilled portion in the middle candle of the three candles, we call it an FVG.

• 3 Candle Pattern: First, second (middle), and third candle.
• Body + Wick: Here we consider not just the candle body, but also the wick.
• Not Covered: The middle candle cannot be covered by the wicks of the upper and lower candles. If it's covered, it's not an FVG.
• Must Fill: The market must fill the FVG (at least 25%).

3.1) Buy Side Imbalance Sell Side Inefficiency (BISI)

We use three consecutive candles to identify an FVG. Same here. For buy side:

• Definition: If there's a gap in the second candle between the High of the first candle and the Low of the third candle, we call it a BISI.
• ⚠️ Carefully: Understand this carefully and precisely. Because if you misunderstand these concepts, your analysis will be wrong.

3.2) Sell Side Imbalance Buy Side Inefficiency (SIBI)

We use three consecutive candles to identify an FVG. Same here. For sell side:

• Definition: If there's a gap in the second candle between the Low of the first candle and the High of the third candle, we call it a SIBI.
• ️ Carefully: Understand this carefully and precisely. Because if you misunderstand these concepts, your analysis will be wrong.

4) Volume Imbalance

Here we use two candles.

• 2 Candle Pattern: After two consecutive candles form, if there's a small gap between these two candles,
• Wicks Fill: And if that gap is filled by the wicks of the candles, we call it a Volume Imbalance.

5) Liquidity Void

A Liquidity Void is:

• Definition: After two consecutive candles form, if there's a small gap between the closing price of the first candle and the opening price of the second candle.
• Gap: It's like a gap.

6) Balance Price Range (BPR)

We learned about FVG earlier. Here we're discussing something related to FVG.

• Overlapping FVGs: A BPR is when an FVG forms and then another FVG forms right after it.
• Common Area: Then there's a common area between the two FVGs. That's what we call BPR.

7) Inversion FVG (IFVG)

After an FVG forms:

• Definition: If the market comes back to that FVG but without reversing, continues in the same direction, we call that FVG an IFVG.
• ⚠️ Important: Remember, an IFVG can also change the direction of the market run. So be very careful and identify these zones correctly. Otherwise, your analysis can be wrong.
• Both Sides: IFVG can form on both buy side and sell side.