Imbalance, or Fair Value Gap (FVG), is one of those Smart Money concepts people confuse with Order Block most often. Both are about a "point of interest", but their nature is different. Let me walk through imbalance in order: what it is, where it comes from, and why price returns to it so often.

What an imbalance is. Look at three consecutive candles. If the wick of the first candle does not overlap the wick of the third, an empty gap is left between them, that is the imbalance. It shows up when a move was so sharp that the middle candle covered its whole range without matching orders on the other side, the market did not fully "exchange" in that moment.

Why price comes back. An unfilled imbalance is essentially unserved orders, someone did not get filled at their price during the sharp move. Until the gap is closed, there is "unfinished business" left in it, and price statistically revisits it more often than a random point on the chart, this is called rebalancing.

Imbalance is often confused with an Order Block, but the logic differs:

  • Order Block: the last opposite candle before an impulsive move, the zone where a large player built a position.
  • Imbalance (FVG): the actual gap between the wicks of the first and third candle in a three-candle structure, a trace of a sharp move, not an entry point of a participant.

They often sit next to each other on the chart, an OB right next to an FVG, which strengthens the zone, but they are two different objects, not synonyms.

How I use it in markup. An imbalance alone is not an entry signal, it is a point of interest. I build entries on a combination: structure (IDM/CHoCH/BOS) sets the direction, and a partial or full fill of the imbalance gives an entry with a clear risk, stop behind the zone. Without structure an imbalance is just a zone on the chart, with no context for where or why to enter.

The SMC Structure / OB / IDM indicator maps imbalances automatically together with structure and Order Blocks, nothing to draw by hand: kovalev.trade/shop

I will review your markup and show where you are mixing up imbalance and Order Block: kovalev.trade/trading

#trading #smartmoney #imbalance #fvg #orderblock