Order Block (OB):
> Imagine a specificĀ price levelĀ on a chart where a significant number ofĀ buy or sell ordersĀ have gathered.
>When these chunks of orders are triggered, it leads to aĀ significant price moveĀ on the chart.
> Essentially, an order block represents aĀ zone of imbalanceĀ where supply and demand are not in equilibrium.
>Traders pay attention to order blocks because prices often react when they revisit these zones.
Fair Value Gap (FVG):
>The FVG refers to theĀ difference between the current value of an asset or currencyĀ and itsĀ fair valueĀ due toĀ inefficiency or imbalanceĀ in the market.
> How to identify FVG: Technical Analysis: Analyze candlestick patterns to find the imbalance. Look for aĀ huge-size candlestickĀ with aĀ 70% body-to-wick ratio. Compare its size with the last 20 to 40 candlesticks. Neighboring candlesticks shouldĀ not overlapĀ significantly with the big one. The price area between the previous candlestickās low and the next candlestickās high acts as the FVG.
>Types of FVG:
>Undervalued FVG: Price is lower than its fair value. A big bearish candlestick indicates this.
>Overrated FVG: Price is higher than its fair value. A big bullish candlestick shows this.
>Drawing the FVG zone on a chart: For undervalued FVG, draw a rectangle using the previous candlestickās low and the next candlestickās high. For overrated FVG, draw a rectangle using the previous candlestickās high and the next candlestickās low. Extend the rectangles to the right until the price fills those zones. The FVG acts as aĀ magnet for price, as everything tends to come to rest or balance itself.
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