Champagne trades
FAIR VALUE GAPS
CHAMPAGNE TRADES
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July 2023
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WHAT IS A
FAIR VALUE
GAP?
A fair value gap is a range in price delivery
where only one side of market liquidity is
offered. EX: Only sellers received a chance to
participate in the markets but buyers did not.
These are usually referred to as "Gaps, FVGS,
Imbalances, Liquidity Voids, and Inefficiencies".
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WHY IS IT
IMPORTANT?
When price only offers one side of
price movement, it will at some point,
NEED to offer the opposite side of that
price action. It does not need to do it
right away.
In knowing this, we can take
advantage of the predicted
rebalancing of the fair value gap or,
the rejection off of the fair value gap.
These are magnets for price.
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PAINT
THEORY.
If we take a paint roller, dip it in paint and we
start from the top of the wall and roll down to
the bottom, we will notice as we get closer to
the bottom the paint will start spotting and
not be as equally distributed as the top half
of the wall where we started. Meaning we will
need to cover those "Gaps" in paint by rolling
back up. This is your fair value gap.
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THERE ARE 3 TYPES OF GAPS.
classic fair value gap
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liquidity void
nwog/ndog
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CLASSIC FVG.
The classic fair value gap is the most
commonly used fair value gap. These
happen often on every time frame, all
throughout the day.
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HOW TO
ANALYZE A FAIR
VALUE GAP.
In this illustration I have taken a
fair value gap and split it into
quadrants. This helps me to
decide if price most likely wants
to fill the entire gap or fill partially
before reversing away and
coming back to fill the gaps later.
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THE HALFWAY
POINT. (C.E)
In this illustration, you will see that I have marked the
halfway point of the fair value gap. (50% on the
Fibonacci tool)
This is what ICT calls the "Consequent Encroachment"
of a gap. This is a very powerful reversal area that
can be used as a target or entry depending on the
situation.
IF PRICES CLOSES ABOVE C.E, IT IS MOST LIKELY TO KEEP
GOING HIGHER. SAME FOR BEARISH MOVEMENT IF IT
CLOSES BELOW.
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LIQUIDITY
VOID.
A liquidity void is a range where one side
of the market liquidity is shown in long
one sided ranges. Price will aggressively
move away from its current state
leaving a hole in price action. This
absence of buying and selling indicates
that smart money is in the market.
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NWOG/NDOG
A New Week Opening Gap (NWOG)
is the difference between Friday's
closing price & Sunday's open price.
A New Day Opening Gap (NDOG) is
the difference between 5pm Close
Price & 6pm Open Price.
Both can be used as potential areas
that price may navigate back to
throughout the week. We want to
only look back 5 weeks for these.
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WICKS!
Wicks are are to be seen as gaps too!
We use the halfway point of a wick as
consequent encroachment. Price tends
to gravitate towards these areas.
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WHAT ARE THE
BEST FAIR
VALUE GAPS TO
USE?
No gap is better than the other.
They are all to be treated equally
when it comes to how we use
them in our every day trading.
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INVERSION
GAPS.
An Inversion Gap is when price runs
through a gap and closes on the
other side of it. It will then use it as
support/ resistance. At times this will
give us an indication on which way
price wants to move.
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BALANCED
PRICE RANGE.
A Balanced Price Range is the result of an
aggressive move up or down leaving a fair
value gap to overlap another fair value
gap.
Once this happens, price should move
away from this area. We can use the
rebalancing of the overlapping fair value
gaps for entries or targets.
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BREAK-AWAYGAP.
A Break-away-gap is a fair value
gap that breaks a swing high or low
and moves away from that area
aggressively.
When this happens, we expect price
to leave this gap unfilled.
This is a good sign that you are on
the correct side of the market.
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PRO TIP:
When does a fair value gap increase the probability of your entry?
When is it found within the ICT 2022 Model, displacing through a
market structure shift (MSS).
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PRO TIP:
When does a fair value gap increase the probability of your entry?
When is it found within the Bullish or Bearish Breaker.
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PRO TIP:
When does a fair value gap increase the probability of your entry?
When is it used for a continuation within the Silver Bullet window.
10am-11am EST, 2pm-3pm EST, 3am-4am EST.
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PRO TIP:
When we have multiple fair value gaps stacked on top of each other
which one do we take?
We wait for price to run through the first fvg, run through the second
one, and once it enters back into the first fvg we can take an entry.
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PRO TIP:
When are gaps used as a high probability magnets?
When they are located near swing highs and lows there is a higher
probability that price will gravitate towards these ares.
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CLOSING STATEMENTS.
Price will only do one of two things: Run for liquidity or rebalance gaps. If we know this,
we can anticipate price gravitating to these areas of price action. Fair value gaps show
us when smart money is in the market because there is an influx of orders creating an
imbalance in price. We are to use these for entires and targets.
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RESOURCES.
ICT 2022 mentorship
ICT 2023 mentorship Episode 1 (Breakaway Gap)
ICT Core Content Month 4 - ICT Fair Value Gaps FVG
ICT Mentorship 2023 - Advanced Gap Theory Introduction (BPR)
2023 ICT Mentorship - Opening Range Gap Repricing Macro
NWOG - New Week Opening Gap
NWOG - New Week Opening Gap Part 2
NDOG - New Day Opening Gap - Part 1
ICT Mentorship 2023 - Advanced Theory On ICT Breaker
2023 ICT Mentorship - ICT Silver Bullet Time Based Trading Model
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