Imbalance

Imbalance describes, more broadly than a simple FVG, any move where supply and demand aren’t balanced — showing up as wide candles and a fast price move over a short time.

The Fair Value Gap is really a concrete, measurable way to identify an imbalance on a chart, but the term can also be used more generally to describe any area where price "didn’t have time" to find a normal balance between buyers and sellers.

Imbalance zones are watched as potential magnets: the market has a natural tendency to come back and fill them, at least partially, before continuing its directional move.

How to spot one: visually, an imbalance shows up as one or more large candles in the same direction, with no overlap between the wicks of neighbouring candles. If you can draw a horizontal line through the interval without touching the adjacent candles, there is an imbalance. The fair value gap is its most codified form, measurable across three candles.

The underlying logic is that of an auction market. A healthy market trades on both sides at every price level. When price crosses an area without balanced exchange, it leaves a trace: buyers who wanted to buy lower and were not filled, sellers left behind. That trace is the imbalance.

How to use it? Two ways. As a return zone: price tends to come back and fill imbalances before continuing, which makes them pullback entry targets. As a strength read: a move leaving several successive imbalances behind it is a sustained move, not noise — it signals directional conviction.

An unfilled imbalance stays an open target, sometimes for days or weeks. Many traders keep a list of major unfilled imbalances on higher timeframes: they form a map of medium-term objectives, independent of daily noise.

The classic mistake: believing everything must be filled, and quickly. Some imbalances are never filled, particularly those created by a fundamental release that durably repriced the asset. Probability of a fill is not certainty.

Second trap: trading the imbalance on its own. Without structure or a directional bias framing it, an imbalance is just a hole in a chart. It has to fit into a read — direction of structure, targeted liquidity, session timing.