Volume imbalance

What it is

A volume imbalance is a two-candle pattern: one candle's body ends, and the next candle's body opens beyond it, so there is a gap between the bodies, but the wicks still overlap. The gap between the two bodies is the imbalance.

Despite the name, no volume data is involved. The difference from a fair value gap is what is measured: an FVG is measured wick to wick across three candles, a volume imbalance body to body across two.

How to spot it

• Two neighbouring candles where the second opens away from the first one's close.
• The wicks overlap, so there's no fair value gap.
• The space between the first candle's close and the second's open is the imbalance.

How to use it

• Treat it as a small support or resistance level; price often comes back to it.
• Use it to refine an entry inside a larger order block or FVG.
• Several of them in one move are a sign of strong displacement.

Common mistakes

• Calling it an FVG; check whether the wicks overlap.
• Expecting a big reaction from a tiny gap on its own.

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