# FVG Channel Averages recent unmitigated fair value gaps into a five-band channel, with inner bands set at Fibonacci ratios of the outer extremes. It tracks trend health through band interactions, marks last-stand breakout levels, and fires reversal signals once one side's gaps are fully mitigated. For price action traders who want structure drawn from imbalances. - Indicator in the LuxAlgo Library, by LuxAlgo, published Oct 2, 2024. - Access: free. - Concepts: [Fair Value Gap](https://www.luxalgo.com/library/concept/fair-value-gap/) (primary), [Parallel Channel](https://www.luxalgo.com/library/concept/parallel-channel/) - Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=cmpwn1pwh002cvhsgp9ebhvzo - Page: https://www.luxalgo.com/library/indicator/fvg-channel/ The **FVG Channel** builds a price channel out of [unmitigated fair value gaps](https://www.luxalgo.com/library/concept/fair-value-gap/): recent bullish gaps are averaged into the upper bands, bearish gaps into the lower bands, over a user-defined lookback. Five lines are plotted in total: two outer extremes and three inner bands at Fibonacci ratios (0.786, 0.5, and 0.236) of the outers, giving a graded map of where imbalances cluster. ## How to Trade the FVG Channel? - **Price holding above the inner upper band**: the 0.786 band defines an uptrend and acts as dynamic support on retracements. - **Price losing the inner upper band without recovering**: a warning of uncertainty that can resolve into consolidation or reversal; the same logic mirrors for downtrends at the lower bands. - **Breakout Levels**: when every gap in one direction has been mitigated except one, the survivor is a "last stand" level, support or resistance whose decisive break reflects strong momentum. - **Reversal signals**: printed when all gaps on one side are mitigated and an engulfing candle forms in the opposite direction; candle colors also change once a side is fully cleared. Under the hood the channel is computed in two steps: mitigation levels of the tracked gaps (bottoms for bullish, tops for bearish) are averaged per side, then a simple moving average smooths the result. The reversal signals are best weighed alongside other tools rather than taken in isolation. ## FVG Channel Settings - **Unmitigated FVG Lookback**: the maximum number of unmitigated gap levels included in the calculation. Higher values build a steadier, longer-horizon channel. - **Smoothing Length**: the intensity of smoothing applied to the channel. Set it to 1 to inspect the raw first-step averages. ## Frequently Asked Questions ### How does the FVG Channel differ from the FVG Trailing Stop? Both average unmitigated gap levels and smooth them with a moving average, but this build plots the full five-band structure for retracement and breakout analysis, while the [FVG Trailing Stop](https://www.luxalgo.com/library/indicator/fvg-trailing-stop/) condenses the same data into a directional stop line. Read structure with the channel; manage exits with the stop. ### Can the FVG Channel call reversals on its own? Its reversal signals require a demanding combination (one side's gaps fully mitigated plus an opposite engulfing candle), but they still benefit from confirmation. Pairing them with momentum or volume context helps balance the risk of acting on a single trigger. ### How do I access the FVG Channel? It is one of the Library's free indicators, no subscription needed. Drop it on the chart directly from this page and put it to work on any market you trade. You can also copy the source code from this page and run it anywhere Pine Script® runs. ## Related indicators - [Fair Value Gap Absorption Indicator](https://www.luxalgo.com/library/indicator/fair-value-gap-absorption-indicator/) (Fair Value Gap): markdown at https://www.luxalgo.com/library/indicator/fair-value-gap-absorption-indicator.md - [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 - [Parallel Pivot Lines](https://www.luxalgo.com/library/indicator/parallel-pivot-lines/) (Parallel Channel): markdown at https://www.luxalgo.com/library/indicator/parallel-pivot-lines.md - [Zig Zag Channels](https://www.luxalgo.com/library/indicator/zig-zag-channels/) (Parallel Channel): markdown at https://www.luxalgo.com/library/indicator/zig-zag-channels.md --- Source: https://www.luxalgo.com/library/indicator/fvg-channel/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/