Core Month 04 03 06 Vacuum Block - newsqlguru/ict-index GitHub Wiki

ICT Mentorship Core Content - Month 04 - ICT Vacuum Block

Key Terms

  • Vacuum Block (VB)

  • Created in Price Action as result of volatility event. Gap formed by "vacuum" of liquidity from event. Vacuum Blocks can be created by events like NFP, CPI, News, or a Session Open.

  • Bullish Vacuum Block (+VB)

  • Gap Up

  • Bearish Vacuum Block (-VB)

  • Gap Down

Content

  • We can use the VB to help us get in sync with the market place.

  • If gap is end of mature trend, can be an exhaustion gap or market capitulation.

  • The Gap is important, no trades occurred in the gap, it is a liquidity vacuum.

  • The market will want to fill in the gap.

  • Will the market run away or return to the range?

  • Create a block from the range of the Gap, this is the Vacuum Block.

  • We treat the gap as a block and apply a OHLC price and a mean threshold 50%.

  • Treat the gap as a candle.

  • With the gap in mind, if we are bullish and suspect price will not close the gap.

  • Time of day, if it's late in the trading day we may anticipate the gap will remain open leaving a FVG to be closed in during later trading sessions.

  • Is there any down candle, bullish orderblock, that would cause the gap to not fill in entirely?

    • e.g. a +OB prior to the gap that is within the range of the gap that would cause price to trade away before filling in the gap.

  • For a trade entry here we need:

    • Immediate price action off the +OB prior to the gap.
    • Stops would be at the bottom of the +OB.

  • With the gap in mind, if we are bullish and suspect price will close the gap.

  • Reasoning, Gap crated early in Day (London/NY) 08:30

    • Anticipate the gap may be closed during the session.
    • e.g. price will close the gap during the same session of trading.

  • We can buy at gap close

  • Stops at lowest low of swing low prior to gap (+OB)

  • If price has closed gap or rallied away, we don't want to see price drop below the gap close.

  • We anticipate price to continue bullish trend higher, if not retracing towards the gap.

  • With the gap in mind, if we are bearish and suspect price will not close the gap.

  • Time of day, if it's late in the trading day we may anticipate the gap will remain open leaving a FVG to be closed in during later trading sessions.

  • Is there any up candle, bearish orderblock, that would cause the gap to not fill in entirely?

    • e.g. a -OB prior to the gap that is within the range of the gap that would cause price to trade away before filling in the gap.

  • For a trade entry here we need:

    • Immediate price action off the -OB prior to the gap.
    • Stops would be at the top of the -OB.

  • With the gap in mind, if we are bearish and suspect price will close the gap.

  • Reasoning, Gap crated early in Day (London/NY) 08:30

    • Anticipate the gap may be closed during the session.
    • e.g. price will close the gap during the same session of trading.

  • We can sell at gap close

  • Stops at highest high of swing high prior to gap (-OB)

  • If price has closed gap or rallied away, we don't want to see price drop below the gap close.

  • We anticipate price to continue bullish trend higher, if not retracing towards the gap.

  • A vacuum block is a break away/down gap.

  • If left open we label an expect price to return.

Notes

  • Find 10 occurrences in past price action and log them in your trade journal.
  • Extra credit if found on multiple time frames.