Price Action Imbalance
Created @July 30, 2021 10:14 PM
Tags
Price imbalance is a very important concept to understand as it can be incredibly
powerful. So imbalances occur when either buyers or sellers take control over a
particular piece of price action. Where essentially it leaves gaps in market.
That price will eventually come back to in the future, so we can rebalance price
before either continuing or continuing in that direction.
So when we look at bearish imbalance, it means sellers have been mostly
dominant in moving price down, and the buyers haven´t had a chance to get
involved.
So the same is true for when we see a bullish imbalance, buyers take control
and the sellers don´t get involved in the majority of that move.
So imbalances occur on every single timeframe. So from the monthly all the way
down to even a seconds timeframes, we will see it happen on every timeframe.
And once we go through the chart just to se how this works, we will start to view the
markets differently and realise how price refills this imbalances sometimes perfectly
before continuing in the other direction.
Price imbalance is when we either get a large momentous candle or where wicks are
not meeting. So the easiest way for me to show this is with the example below where
we are gonna look at 3 bullish or bearish candles in a row.
Price Action Imbalance 1
, 1. So if we look at this example here, we have 3 bearish candles in row, so its all
selling pressure. Now this would be classified as a balanced bit of price action,
because if we look at the wicks, we can see they are meeting. So what does that
mean? Well if we look at the low of the first candle wick, we can see it was down
here, we then had price come up and we had this candle coming down, and then
the top of the third candle is meeting with the bottom of the first candle. So we
can see there is no imbalance that has been left. So price has come down,
pulled back a little bit, come down again and then its pulled back to rebalance
and meet the bottom of this wick here, with the top of the 3rd wick.
2. Now an imbalance would be here, so we have the exact same thing with 3
candles, but we can see how the bottom of the first wick here is not meeting with
the top of the 3rd wick, so this whole move from this wick to this wick, this bit of
trading in here, this selling pressure is called and imbalance. So we can see
where the wicks are not meeting. So thats basically what an imbalance is. This is
inefficient.
3. Now we have the bullish example here, so we have 3 bullish candles in a row.
This is a balanced bit of price action, because the top of the first wick is meeting
with the bottom of the 3rd wick, so its balanced and another word for it is
efficient. So its efficient price action.
4. Now and the imbalance, we can see same thing, we have a gap from the top of
the first wick to the bottom of the 3rd wick. So this is the imbalance in here.
Price Action Imbalance 2
, Now what Im gonna do is go through EU. So I have drawn out some imbalances and
some OBs.
So zoom in right into this bit of price action, we can see we have the 3 candles
coming down, bearish push, and if we take the low from the first candle which is
here, and the high, we can see this is an imbalance, and I have put it on, so the line
here from this wick to this wick, we can see so from here to here, this is an
imbalance, so price is likely to refill that before continuing, but if we also see this
push down bos and we have an OB, which will be the last up move refined down to
this candle, price tapped in, before then we are continuing.
We can see we tapped in, we rebalance that bit of inefficiency, and then we continue
after tapping into the OB.
Price Action Imbalance 3
Created @July 30, 2021 10:14 PM
Tags
Price imbalance is a very important concept to understand as it can be incredibly
powerful. So imbalances occur when either buyers or sellers take control over a
particular piece of price action. Where essentially it leaves gaps in market.
That price will eventually come back to in the future, so we can rebalance price
before either continuing or continuing in that direction.
So when we look at bearish imbalance, it means sellers have been mostly
dominant in moving price down, and the buyers haven´t had a chance to get
involved.
So the same is true for when we see a bullish imbalance, buyers take control
and the sellers don´t get involved in the majority of that move.
So imbalances occur on every single timeframe. So from the monthly all the way
down to even a seconds timeframes, we will see it happen on every timeframe.
And once we go through the chart just to se how this works, we will start to view the
markets differently and realise how price refills this imbalances sometimes perfectly
before continuing in the other direction.
Price imbalance is when we either get a large momentous candle or where wicks are
not meeting. So the easiest way for me to show this is with the example below where
we are gonna look at 3 bullish or bearish candles in a row.
Price Action Imbalance 1
, 1. So if we look at this example here, we have 3 bearish candles in row, so its all
selling pressure. Now this would be classified as a balanced bit of price action,
because if we look at the wicks, we can see they are meeting. So what does that
mean? Well if we look at the low of the first candle wick, we can see it was down
here, we then had price come up and we had this candle coming down, and then
the top of the third candle is meeting with the bottom of the first candle. So we
can see there is no imbalance that has been left. So price has come down,
pulled back a little bit, come down again and then its pulled back to rebalance
and meet the bottom of this wick here, with the top of the 3rd wick.
2. Now an imbalance would be here, so we have the exact same thing with 3
candles, but we can see how the bottom of the first wick here is not meeting with
the top of the 3rd wick, so this whole move from this wick to this wick, this bit of
trading in here, this selling pressure is called and imbalance. So we can see
where the wicks are not meeting. So thats basically what an imbalance is. This is
inefficient.
3. Now we have the bullish example here, so we have 3 bullish candles in a row.
This is a balanced bit of price action, because the top of the first wick is meeting
with the bottom of the 3rd wick, so its balanced and another word for it is
efficient. So its efficient price action.
4. Now and the imbalance, we can see same thing, we have a gap from the top of
the first wick to the bottom of the 3rd wick. So this is the imbalance in here.
Price Action Imbalance 2
, Now what Im gonna do is go through EU. So I have drawn out some imbalances and
some OBs.
So zoom in right into this bit of price action, we can see we have the 3 candles
coming down, bearish push, and if we take the low from the first candle which is
here, and the high, we can see this is an imbalance, and I have put it on, so the line
here from this wick to this wick, we can see so from here to here, this is an
imbalance, so price is likely to refill that before continuing, but if we also see this
push down bos and we have an OB, which will be the last up move refined down to
this candle, price tapped in, before then we are continuing.
We can see we tapped in, we rebalance that bit of inefficiency, and then we continue
after tapping into the OB.
Price Action Imbalance 3
