Introduction
The Gap Between Buyers and Sellers
Every strong market move leaves something behind:
A void.
A space where price moved too quickly
for both sides to agree.
That’s Imbalance:
The gap between buying and selling pressure
that Smart Money later returns to fill.
What Is Imbalance?
The Definition:
📊 Imbalance occurs when price moves so aggressively in one direction
that it leaves a visible gap between candles,
it’s a moment where there were no active transactions in the opposite direction.
💬 In Smart Money terms:
It’s where displacement created inefficiency,
and where the market must later rebalance.
📍 Every imbalance marks where liquidity was used, not lost.
How Smart Money Reads Imbalance
Smart Money views imbalance as evidence,
it’s the aftermath of displacement and intent.
1️⃣ Identify a strong impulsive move (displacement).
2️⃣ Observe the “gap” left behind: The space between wicks that never overlap.
3️⃣ Recognise that as Inefficiency or Fair Value Gap (FVG).
4️⃣ Wait for price to retrace back into it.
5️⃣ Trade in alignment with the original displacement.
📍 Imbalance confirms control, retrace confirms opportunity.
How Smart Money Trades Imbalance
1️⃣ Identify displacement candles (large, clean moves).
2️⃣ Mark the FVG: The unbalanced area between wicks.
3️⃣ Wait for retrace into the gap.
4️⃣ Confirm direction with structure (CHoCH/BOS).
5️⃣ Enter in alignment with the original displacement.
6️⃣ Target equilibrium or opposite imbalance.
📍 Imbalance is not an entry, it’s an environment.
Example
Bullish Imbalance Filling and Expanding
1️⃣ Price sweeps liquidity below equal lows.
2️⃣ A strong bullish candle creates an imbalance, wicks don’t overlap.
3️⃣ Price pushes higher, then retraces into that gap.
4️⃣ Smart Money re-enters from the zone.
5️⃣ Delivery continues upward.
💬 The retrace isn’t reversal, it’s refinement.
The Do Nots
Common Mistakes Traders Make
❌ Treating every gap as a valid imbalance.
❌ Entering before retrace confirmation.
❌ Ignoring structure bias.
❌ Confusing reversal for rebalancing.
💬 Not every imbalance is opportunity, only those with context and control.
Final Thoughts
Imbalance is the market’s memory,
the evidence of movement and intent.
It’s where Smart Money created inefficiency
and where they return to rebalance.
Retail sees gaps as randomness.
Smart Money sees them as roadmaps.
Because every imbalance
is a promise the market plans to keep.