When a potential imbalance is confirmed as a zone?
When a potential imbalance is confirmed as a zone?
There are TWO SCENARIOS:
1. A potential imbalance takes an opposing imbalances out (and/or)
2. A potential imbalance is created if price breaks a trendline with one or more full OCHL candles. This trendline must connect the latest 2 peaks/valleys or 3 or more consecutive CPs (Continuation Pattern)
Both scenarios can happen at the same time, which is why I am using the AND/OR Boolean statement in the rule above. As long as only one criteria is met the imbalance will be confirmed.
So, once you draw a zone based on rules, you need to confirm validity of the zone using the 2 rules mentioned.