Bearish Power of 3
If we are bearish on the daily bais then we can expect the next trading days candle to open, rally higher, and close at the near the low of the day.
Here is a closer look at the phenomenon from New York Open. The daily bais is bearish. Price rallies higher from the open, and heads lower before closing near the low of the day.
On the lower timeframe 4min chart – the same fair value set up appears for taking the short trade.
Here is an example of a trade on a bearish 3 min chart where price moves into a fair value gap where you can enter the trade and exit at a key low where market liquidity is located.
Where is price headed? Price is headed in the direction of Buyside/Sellside Liquidity or to fill an Imbalance. So there are Long Term Highs/Lows, Intermediate Highs/Lows, Short-Term Highs/Lows.
Here is an example of a fair value gap trade entry area located in a Short Term High identified on the hourly chart but can also be seen on this 15min. chart.
Here is an even closer look at how precise your entry can be in the fair value gap for this short example.
Your imbalances that are filled should create higher lows to confirm your bias is correct on trading short and being bearish.
Always trade in the direction of your daily bias study and if you do not know what direction price is being drawn to stay neutral and out of the markets until you can confirm a bias.
Back Test the ICT Method in MT4 using Soft4Fx
Replicate the Order Blocks, Fair Value Gaps and Liquidity Pools.