Article Executive Summary:Learn how price imbalances act as financial magnets on 5-minute charts. Master the art of trading FVG fill-and-refuel setups in Bank Nifty.
Understanding Fair Value Gaps
A Fair Value Gap (FVG) occurs when aggressive buying or selling creates a one-sided imbalance in price action. This leaves behind a price vacuum where one side of the market was entirely unrepresented during the candle's duration.
Because institutional algorithms strive for market efficiency, price has a mathematical tendency to pull back into these imbalance zones to rebalance liquidity before continuing the primary trend.
Anatomy of a 3-Candle Imbalance
An FVG is identified using a 3-candle sequence:
- Candle 1: The initial candle prior to the explosive move.
- Candle 2: The displacement candle with extreme volume & candle body length.
- Candle 3: The follow-through candle.
Intraday Execution Strategy
- 1Filter for Higher Timeframe Bias: Identify the 1-hour trend on Bank Nifty.
- 2Locate Fresh Imbalance: On the 5-minute chart, locate an unmitigated FVG created during market open (09:15 – 10:30 AM).
- 3Set Limit Orders: Place buy limit orders at the top of the Bullish FVG zone with stop-loss placed 5 points below Candle 2's low.
Tags:#FVG#Imbalance#Bank Nifty#Intraday Strategy#Price Action
