# Fair Value Gap Absorption Indicator

The Fair Value Gap Absorption Indicator detects three-candle imbalances and then tracks how much of each gap price has worked back through, printing live mitigation percentages until a new gap takes over. A width filter tunes detection sensitivity and historical gaps stay reviewable, giving traders a running gauge of how completely inefficiencies get repaired.

- Indicator in the LuxAlgo Library, by LuxAlgo, published Jan 17, 2024.
- Access: free.
- Concepts: [Fair Value Gap](https://www.luxalgo.com/library/concept/fair-value-gap/) (primary), [Absorption & Exhaustion](https://www.luxalgo.com/library/concept/absorption-and-exhaustion/), [FVG Behavior Rules](https://www.luxalgo.com/library/concept/fvg-behavior-rules/)
- Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=cmpwn1j550023vhsgt7atwfba
- Page: https://www.luxalgo.com/library/indicator/fair-value-gap-absorption-indicator/

**Fair Value Gap Absorption Indicator** watches each [fair value gap](https://www.luxalgo.com/library/concept/fair-value-gap/) after it forms, not just when it prints. Detection uses the classic three-candle pattern (a large central candle whose neighbors' wicks fail to overlap it), and the tool then keeps that imbalance highlighted until a new gap surfaces, measuring how much of the void price has worked back through along the way.

## How to Trade the Fair Value Gap Absorption Indicator?

- **New imbalance appears**: a displacement candle has left untraded space; expect price to be drawn back toward it before the move resumes.
- **Mitigation percentage climbs**: the gap is being repaired bar by bar. The overlay shows exactly how much [absorption](https://www.luxalgo.com/library/concept/absorption-and-exhaustion/) has occurred, a process that often spans several candles.
- **Gap fully absorbed**: with the inefficiency repaired, continuation in the original trend direction becomes the working scenario.
- **Historical gaps on**: keep prior imbalances visible to study how the instrument you trade typically treats them.

## Fair Value Gap Absorption Indicator Settings

- **Fair Value Gap Width Filter**: a multiplier that filters detections by gap size, tuning sensitivity up or down.
- **Percentage Display of Mitigation**: overlays the percent of each imbalance already absorbed directly on the chart.
- **Visibility of Historical Fair Value Gaps**: keeps past gaps on display for review.
- Color options cover bullish and bearish imbalances and their mitigation states.

## Frequently Asked Questions

### Why is the width filter quiet early in the chart?

The filter is built on a fixed-length ATR calculation and needs 144 candles of data before it can act. Until that history exists, detections display without size filtering.

### How is this different from a standard gap detector?

A standard detector draws every gap and clears it when filled. This build concentrates on the current imbalance and quantifies its absorption in percent, trading breadth for depth. If you want the wide-angle map instead, [Liquidity Voids (FVG)](https://www.luxalgo.com/library/indicator/liquidity-voids-fvg/) covers it.

### What does access cost?

Nothing. The indicator is free through the LuxAlgo Library, and it can be opened in Quant, our coding agent, straight from this page for hands-on testing. You can also copy the source code from this page and run it anywhere Pine Script® runs.

## Related indicators

- [Fair Value Gaps Mitigation Oscillator](https://www.luxalgo.com/library/indicator/fair-value-gaps-mitigation-oscillator/) (Fair Value Gap): markdown at https://www.luxalgo.com/library/indicator/fair-value-gaps-mitigation-oscillator.md
- [Breakaway Fair Value Gaps](https://www.luxalgo.com/library/indicator/breakaway-fair-value-gaps/) (Fair Value Gap): markdown at https://www.luxalgo.com/library/indicator/breakaway-fair-value-gaps.md
- [HTF Fair Value Gap](https://www.luxalgo.com/library/indicator/htf-fair-value-gap/) (Fair Value Gap): markdown at https://www.luxalgo.com/library/indicator/htf-fair-value-gap.md
- [Inversion Fair Value Gaps (IFVG)](https://www.luxalgo.com/library/indicator/inversion-fair-value-gaps-ifvg/) (Fair Value Gap): markdown at https://www.luxalgo.com/library/indicator/inversion-fair-value-gaps-ifvg.md
- [ICT Implied Fair Value Gap (IFVG)](https://www.luxalgo.com/library/indicator/ict-implied-fair-value-gap-ifvg/) (Fair Value Gap): markdown at https://www.luxalgo.com/library/indicator/ict-implied-fair-value-gap-ifvg.md
- [Liquidity Voids (FVG)](https://www.luxalgo.com/library/indicator/liquidity-voids-fvg/) (Fair Value Gap): markdown at https://www.luxalgo.com/library/indicator/liquidity-voids-fvg.md
- [ICT Immediate Rebalance](https://www.luxalgo.com/library/indicator/ict-immediate-rebalance/) (FVG Behavior Rules): markdown at https://www.luxalgo.com/library/indicator/ict-immediate-rebalance.md
- [FVG Instantaneous Mitigation Signals](https://www.luxalgo.com/library/indicator/fvg-instantaneous-mitigation-signals/) (FVG Behavior Rules): markdown at https://www.luxalgo.com/library/indicator/fvg-instantaneous-mitigation-signals.md

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Source: https://www.luxalgo.com/library/indicator/fair-value-gap-absorption-indicator/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/