
What to consider in smaller time frame FVG or OB?
When analysing Fair Value Gaps (FVG) or Order Blocks (OB) in smaller time frames, several key factors must be considered to enhance trading accuracy:
Context & Higher Time Frame Alignment – Smaller time frame FVGs or OBs are more reliable when they align with higher time frame structure (e.g., daily/weekly levels). A 5-minute FVG near a daily OB carries more weight.
Liquidity & Volume – Check if the FVG/OB forms near key liquidity zones (high-volume nodes, swing highs/lows). Thin liquidity can lead to false breaks.
Momentum Confirmation – Use price action (e.g., strong rejection, engulfing candles) or indicators (RSI, MACD) to confirm reactions at these levels.
Size & Quality – Larger, cleaner FVGs (3+ candle gaps) or fresh OBs (untested) have higher validity. Small, fragmented gaps may lack significance.
Market Phase – FVGs work best in trending markets (retracement fills), while OBs excel in reversal/consolidation zones.
Time Sensitivity – Smaller time frames decay faster; avoid over-trading minor gaps unless part of a larger pattern.
By combining these factors, traders can filter high-probability setups while avoiding noise. Always prioritise confluence with market structure.
Context & Higher Time Frame Alignment – Smaller time frame FVGs or OBs are more reliable when they align with higher time frame structure (e.g., daily/weekly levels). A 5-minute FVG near a daily OB carries more weight.
Liquidity & Volume – Check if the FVG/OB forms near key liquidity zones (high-volume nodes, swing highs/lows). Thin liquidity can lead to false breaks.
Momentum Confirmation – Use price action (e.g., strong rejection, engulfing candles) or indicators (RSI, MACD) to confirm reactions at these levels.
Size & Quality – Larger, cleaner FVGs (3+ candle gaps) or fresh OBs (untested) have higher validity. Small, fragmented gaps may lack significance.
Market Phase – FVGs work best in trending markets (retracement fills), while OBs excel in reversal/consolidation zones.
Time Sensitivity – Smaller time frames decay faster; avoid over-trading minor gaps unless part of a larger pattern.
By combining these factors, traders can filter high-probability setups while avoiding noise. Always prioritise confluence with market structure.
Apr 18, 2025 02:34