A trader explains how a CPI-driven price drop created daily "fair value gaps" and describes using multi-timeframe analysis to set retracement targets. The speaker prefers using higher-timeframe points of interest (hourly, 4-hour, daily, weekly) for large moves and considers 50% retracement of a leg as a potential target.
So here that day, CPI did drop quite a bit. Ended up taking out this daily low and into a daily feg, into a daily fair value gap. And we had this huge push down lower and we started showing, even before the New York opening session, bullishness. So this is where I would look for potential retracement then to 50% of this leg. If we go to the hourly, this is an hourly fair value gap. We took out this low from this leg. We've manipulated here. And I knew that I had more upside targets here. On the hourly, if you want a large move, you're typically looking for that as your target. If you're looking looking at a 15 minute or small time frame, that's fine too. But how I like to line things up is four hour or hourly point of interest for targets or even higher. Daily and weekly are where you really get those huge moves.
