Two fair value gaps pointing opposite ways, overlapping in price. The band they share has been skipped in both directions — and it does hold better than an ordinary gap, by a margin small enough to state precisely.
A balanced price range is the overlap between a bullish and a bearish fair value gap formed close together in time, marked as a zone because price has now raced through those prices in both directions.
A fair value gap is a band of price that got skipped. Three candles, and the middle one moves so fast that the first and third never overlap — leaving prices where buying happened but almost no selling, or the reverse.
A balanced price range is what you get when that happens twice, in opposite directions, over the same prices. Price races up leaving a bullish gap, then turns and races back down through those same prices leaving a bearish one. The band where the two overlap has now been skipped in both directions.
The argument for it is straightforward: whatever unfinished business a single gap represents, an overlapping pair represents twice over, from both sides. Price has now twice declined to trade properly in that band.
A road has a stretch that everyone speeds through — no reason to stop, nothing there. That is a single gap.
Now the traffic reverses and speeds through the same stretch the other way. Two directions of travel have both treated that stretch as somewhere to get past rather than somewhere to be. If you wanted to guess where the next set of brake lights appears, that stretch is a better candidate than one which has only ever been rushed once.
The comparison this page rests on is not a chance baseline but the concept's own simpler form: every fair value gap that never became part of a range, measured by the same forward rule. 6,565 ranges across five instruments, against several times that many single gaps.
| Instrument | Ranges found | Price returned | Held | Single gap held | Difference |
|---|---|---|---|---|---|
| XAUUSD | 1,480 | 82.5% | 91% | 85.6% | +5.4 pts |
| GBPUSD | 1,329 | 81% | 90.1% | 83.6% | +6.5 pts |
| EURUSD | 1,244 | 79.7% | 87.3% | 83.7% | +3.6 pts |
| US30 | 1,246 | 78.6% | 89.3% | 84.3% | +5 pts |
| NAS100 | 1,266 | 79.5% | 87.9% | 85.8% | +2.1 pts |
What was counted: A bullish and a bearish hourly fair value gap formed within ten bars of each other whose price bands overlap; the balanced price range is the overlap. The control is every fair value gap that never formed part of one, measured by the identical forward rule: entered means price traded into the band within 48 hours, held means it left the band on the side it arrived from before any hourly close through the far side.
On gold, price came back into the range 82.5% of the time within two days, and when it did the band held 91% of the time against 85.6% for an ordinary gap. That is 5.4 points for the overlap.
The direction of the result was the same on 5 of the five instruments. The size varied — from a couple of points to over six — and on the one exception the two were level. Nowhere did the range perform worse.
Held means price entered the band and was then pushed a full band-height back the way it came, before reaching the far edge. Both outcomes sit the same distance from where price arrives, which sounds obvious and was not what the first two versions of this measurement did.
The first scored a hold the moment price ticked one pip back out of the band. Every kind of zone held about 98% of the time, because ticking one pip out of a band is nearly automatic. The second put the failure threshold a band-height beyond the far edge, which left it twice as far away as the success threshold — and everything still looked reliable.
Neither version was measuring zones. Both were measuring a badly placed threshold. If a backtest tells you almost everything works, that is usually what has happened.
Marcus is watching gold. A sharp rally leaves a bullish gap between 4,106 and 4,120. Four hours later price reverses hard and leaves a bearish gap between 4,102 and 4,118 on the way down.
What he marks. The overlap: 4,106 to 4,118. Twelve dollars wide, narrower than either gap on its own.
What he expects. A return is likely, roughly four times in five within two days. When price arrives, about nine times in ten it gets pushed a band-height back before crossing to the far side.
How he sizes it. Normally. The overlap bought him about 5.4 points over an ordinary gap — worth preferring this setup over that one, not worth doubling his risk. This is the exact judgement the confluence lesson measures directly, and the answer there is unkind to stacking.
What would make him drop it. A band so wide it covers half the recent range. A wide band makes the hold test trivially easy to pass and tells him nothing, which is the same trap the measurement itself fell into twice.
Most of the composite concepts in this series did not beat their own simpler version. This one did, on four instruments out of five. Small, consistent and repeatable beats large and unverifiable — replay real candles and see it happen.
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What is a balanced price range?
The band where a bullish fair value gap and a bearish one overlap, when both formed within a few hours of each other. Price skipped those prices going up and skipped them again coming back down.
Is a BPR better than a normal fair value gap?
Slightly, and measurably. On gold the overlap held 91% of the time against 85.6% for gaps that never formed a range — 5.4 points. The range came out ahead on 5 of five instruments and behind on none.
How often does price come back to one?
82.5% of the time within two days on gold, and between roughly 79% and 83% across the other instruments. So the great majority of the ones you mark will actually be tested.
Should I mark both gaps or just the overlap?
Just the overlap. It is normally narrower than either gap, and the narrower band is what was measured. Shading the union of the two gives you a wider zone that will look like it works more often for the wrong reason.
How close together do the two gaps need to be?
Ten hourly candles in this measurement. The window is a judgement call and it is stated for that reason — two gaps far apart that happen to overlap are two separate events, not one structure, and including them would change the number.
Can I size up on a balanced price range?
The measured advantage is a few percentage points. That is a reason to prefer this setup over a plain gap when both are available; it is not a reason to risk more. The confluence lesson tests what happens when traders treat stacked reasons as licence to increase size, and the answer is not encouraging.
A few points of extra reliability is worth having and easy to squander by treating it as a much larger edge. Replay the candles, mark both kinds of zone, and let the size of the gap between your two numbers set how much extra weight the overlap earns.
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This page focuses on “Balanced price range”.Two opposing fair value gaps overlapping in price. Measured against every gap that never formed one: the overlap held 91% on gold against 85.6% for a single gap, and came out ahead on 5 of five instruments.For “Balanced price range”, a beginner should identify what the evidence guide measures, assumes or teaches before acting on its conclusion.Treat this page's account of “Balanced price range” as a learning reference rather than a prediction, signal or promise of future performance.
For “Balanced price range”, confirm the population, sample size, clock, units and calculation behind the headline number.While exploring “Balanced price range”, compare the median, spread of outcomes and exceptions instead of reading only the average or best row.Keep your “Balanced price range” record honest: use the statistic to frame a test or risk assumption, not to predict the next candle.Before leaving “Balanced price range”, recheck the result on a separate period before turning a descriptive pattern into a rule.
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