Fair Value Gaps w Signals

The Fair Value Gaps w Signals indicator is a comprehensive technical analysis tool designed to automatically identify and visualize price imbalances on any timeframe to help traders find potential support and resistance zones.

Usage

The Usage section focuses on how these price gaps represent areas of market imbalance that are often revisited by price. Traders use these zones to determine the current market range and sentiment.

• Bullish FVGs: These indicate a potential bullish range or support. When price is in a "discount" (lower portion) of a range, a bullish FVG can act as a long entry signal.
• Bearish FVGs: These indicate a potential bearish range or resistance. An untouched bearish FVG often marks the end of a range or a target for retracement.
• Signals: The script plots triangle shapes (Up for Buy, Down for Sell) when a new FVG is detected, provided it changes the direction from the last signal.
• Retracements: A bullish FVG appearing in a "premium" (upper portion) of a bearish range can indicate a temporary retracement before the larger bearish trend continues.

Details

Fair Value Gaps (FVG) occur when there is a three-candle sequence where the wick of the first candle and the wick of the third candle do not overlap, leaving a "gap" in the middle candle. This tool identifies these imbalances and projects them forward as colored boxes until they are mitigated (touched) by price action. The script specifically looks for these gaps and ensures they are "bar locked" and stable before displaying them to avoid repainting issues.

Settings

• Extend Length: This setting determines how many bars into the future the FVG box will extend if it remains unmitigated.
• Bullish FVG Color: Allows the user to customize the background color and transparency for bullish imbalance zones.
• Bearish FVG Color: Allows the user to customize the background color and transparency for bearish imbalance zones.

FAQ

How do I use the signals for entries?

Signals indicate the detection of a new imbalance. Traders often look for a "turnaround story" on a smaller timeframe within the FVG zone or use the negation of the FVG candle as a stop-loss level.

When does an FVG box disappear?

The box is mitigated and removed once the price action (wick) returns to fill the gap, signifying that the market has become "balanced" at that specific price level.

How can I access Fair Value Gaps w Signals?

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