The main goal of this document is to explain the indicator, not to explain strategies.
general description of Imbalances
Indicator that plots boxes for Imbalaces (also known as FVGs / Fair Value Gaps or inefficiencies)
Imbalances are a very useful concept in price action trading, as they provide a trader with information about where a lot of orders were injected creating this inefficiency in the market. This inefficiency can become a magnet for price in the future to resolve this inefficiency as there are many resting orders. A trader can use this information to target an imbalance, or to look for a potential entry for a long/short making it a good POI.
Examples
<aside> ❗ The examples below are cherry-picked, meaning I picked the successful ones to highlight what the indicator shows you. Be aware not all Imbalances provide a reaction.
</aside>
Show Developing Bar (NEW)
This will show you Imbalances once they are developing, but aren’t confirmed yet. This can create an edge, because you can anticipate on future Imbalances. Also this feature is extremely helpful during backtesting.
Explanation using the image above. So normally, the Imbalance is confirmed, once bar 3 is closed and bar 4 starts, because that’s when the imbalance is actually confirmed. When bar 3 isn’t closed yet, it can wick into the imbalance, engulfing that whole area, and then the imbalance is filled.