FVGs & CEs + Alerts: simple method

The FVGs & CEs + Alerts: simple method indicator paints Fair Value Gaps (FVGs) and their midlines, known as Consequent Encroachment (CE), to help traders identify areas of price sensitivity and potential re-fills.

Usage

The tool is designed to highlight imbalance areas where price may seek to return. Users can observe how price reacts to these gaps and their midlines to gauge market sentiment and potential reversal or continuation points.

• Mitigation Tracking: The indicator automatically stops painting an FVG once price reaches a specific threshold (either the CE or a full fill), keeping the chart clean and focused on active levels.
• Timeframe Flexibility: While usable on various timeframes, users should note that lower timeframes generate more frequent FVGs, which may lead to more rapid alert triggers.
• Strategic Overlay: This tool is best used in conjunction with market structure, time of day, and location context rather than as a standalone signal generator.

Details

Fair Value Gaps represent a "naked" candle body where the preceding and succeeding wicks do not meet, creating a perceived liquidity void. The Consequent Encroachment (CE) is the 50% level of this gap and often serves as a significant psychological and technical support or resistance level. This implementation utilizes an efficient looping method to manage box and line drawings, ensuring performance stability even with high historical lookbacks.

Settings

General Settings

• Number of days lookback: Controls the historical depth of the indicator by limiting how many days back it searches for FVGs.
• "UP" FVGs / "DOWN" FVGs: Toggles the visibility and color of bullish and bearish gaps independently.
• Show CE: Enables or disables the plotting of the midline for each FVG.
• CE Style/Color: Customization options for the appearance of the midline.
• Delete filled boxes & lines: When enabled, mitigated FVGs are removed from the chart entirely rather than just stopped.

Conditions

• Use CE (as opposed to Full Fill): Determines the mitigation trigger. If enabled, the FVG is considered "filled" when price hits the midline. If disabled, price must completely fill the gap.
• Use candle Bodies: If enabled, the script uses candle opens/closes to determine mitigation instead of high/low wicks.

FAQ

How do I use the alerts effectively?

Alerts can be set for price entering an FVG (IOFED), hitting a threshold (CE or Full Fill), or upon the initial confirmation of a new gap. It is recommended to use these as notifications to analyze the chart rather than for blind execution.

Why do some FVGs disappear or stop extending?

FVGs stop extending once the user-defined threshold (CE or Full Fill) is reached by price action. This is intended to highlight only the "untouched" liquidity areas.

How can I access this tool?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.