FVG Detector Fair Value Gap-Imbalance-Mitigated

The FVG Detector [TradingFinder] Fair Value Gap-Imbalance-Mitigated indicator identifies and highlights price imbalances where market equilibrium is absent, helping traders spot potential zones for trend continuation or reversal.

Usage

The Usage section highlights how traders can interpret the various zones generated by the script. The indicator plots colored boxes representing identified gaps:

• Bullish FVG (Demand): Represented by green boxes, these areas occur during upward trends when a price gap remains unfilled by subsequent candles. They typically act as support zones where traders expect the price to continue its upward trajectory after a retracement.
• Bearish FVG (Supply): Represented by orange/red boxes, these occur in downward trends. They act as resistance zones where price is expected to continue moving lower upon returning to the area.
• Mitigation: When price returns to an FVG area and completely fills the gap, it is considered "Mitigated." The indicator tracks these states to show which zones are still active and which have had their pending liquidity executed.

Details

Fair Value Gaps (FVG) are created when a strong market move (such as a "Marubozu" or "Spike" candle) leaves a gap between the wick of the candle preceding the move and the wick of the candle following it. This implementation focuses on the concept of market imbalance, where power is heavily skewed toward buyers or sellers, leaving an "inefficiency" that the market often seeks to fill later.

A unique feature of this tool is its filtering system, which uses an error correction algorithm to evaluate the quality of the gaps. Rather than showing every minor price displacement, users can choose how strictly the script defines a "valid" FVG based on candle body size, volatility (ATR), and candle direction.

Settings

• FVG Filter: Enables or disables the advanced detection algorithm. When "On", it filters for more optimal gaps based on the selected filter type.
• FVG Filter Type: Controls the strictness of the gap detection:
  • Very Aggressive: Detects the highest number of FVGs with minimal conditions.
  • Aggressive: Adds a volatility check where the middle candle size must meet a minimum threshold.
  • Defensive: Requires the middle candle to be relatively large with a significant body, ensuring higher quality trend moves.
  • Very Defensive: The strictest mode, filtering out dojis and ensuring all three candles in the sequence align with the trend direction.
• Show Demand FVG: Toggles the visibility of bullish/demand-related gap boxes.
• Show Supply FVG: Toggles the visibility of bearish/supply-related gap boxes.

FAQ

How do I interpret a mitigated FVG? A mitigated FVG is one that price has already revisited and "filled." This generally suggests that the initial imbalance has been neutralized and the zone may no longer act as a strong support or resistance.

Can I use this on any timeframe? Yes, the FVG Detector is designed to work across various symbols and timeframes. Users should adjust the "Filter Type" (e.g., Defensive vs. Aggressive) to suit the volatility of their specific chart.

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