What it means
A liquidity void is a price range crossed by one or more large, one-directional candles with little trading back and forth. On the chart it looks like a long run of overlapping-free bodies.
A fair value gap is a specific three-candle version; a void can span several candles.
Why traders use it
Because little trading happened inside the void, traders expect price to return later to "rebalance" it. That gives potential pullback areas and targets.
Voids also show urgency: whoever moved price there did so aggressively.
Chart examples
A void and its later rebalance
How to identify it objectively
- 1Find a sequence of large candles in one direction with little overlap.
- 2Mark from the start of the first large body to the end of the last.
- 3Note the 50% level of the void.
- 4Track whether later price fills it partly, fully or not at all.
Bullish use
- 1A bullish void forms in an uptrend.
- 2Price retraces into it, often to around half.
- 3A bullish reaction there can continue the move.
Bearish use
- 1A bearish void forms in a downtrend.
- 2Price rallies back into it.
- 3A bearish reaction there can continue the move down.
What confirms it
- The void formed with displacement.
- Reaction inside it on the retracement.
What invalidates it
- Price fills the void completely and keeps going through its origin.
How a hypothetical setup is built
Entry
On a retracement to the void's midpoint with a reaction in the trend direction.
Stop
Beyond the start of the void.
Target
The high (or low) made after the void.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
- Fair Value Gaps & Order BlocksInverse Fair Value Gap (IFVG)
- Fair Value Gaps & Order BlocksBalanced Price Range (BPR)
- LiquidityDraw on Liquidity (DOL)
- Full guide on The TradeskillFair Value Gap (FVG) Explained
Historical testing
Not tested on The Tradeskill yet.
Limitations: when it fails
- Some voids are never revisited.
- Defining "little overlap" needs a fixed rule.
- In news-driven moves voids can fill violently.
Knowledge check
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