Marco Island, FL
Legendary Market Wizard
Experience: Beginner
Platform: Sierra Chart
Broker: AMP Global
Trading: MCL MES
Frequency: Several times daily
Duration: Minutes
Posts: 786 since Jul 2022
Thanks Given: 877
Thanks Received: 910
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TomTownsend has good points. I would also say that fair value gaps occur most often in the opposite direction of the trend. If the ES is pushing highs at 4280 and pulls back to 4277 a fair value gap often forms to the downside where the price gaps down 3-6 ticks where there is no trades in the middle. Why does a fair value gap occur in the opposite direction of the trend. I believe, if the price is pushing highs for example, there is ample liquidity to the upside and less liquidity below the last price creating an imbalance to the downside. A lot of times the market will fill this gap with volume where it gapped. This is what I have observed after years of watching the DOM/price ladder.
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