Add FVG (Fair Value Gap - Imbalance - Reduced) detector indicator TradingView - Free - [TF Lab]

The Fair Value Gap (FVG) Detector indicator on Trading View is an essential technical analysis tool within the ICT (Inner Circle Trader) strategy system, automatically identifying areas of imbalance on price charts. In strong market movements, a Fair Value Gap is created when a specific candle does not cover the body of the previous and following candles. Under these conditions, due to the imbalance between buyers and sellers, the market is likely to return to these areas to address the gaps. The indicator marks bearish gaps with an orange box and bullish gaps with a green box.

Indicator Table

Overview

The ICT (Inner Circle Trader) trading style developed by Michael Huddleston is one of the advanced strategies in technical analysis. It is founded on the concepts of liquidity and price imbalance. A key element in ICT is the identification of Fair Value Gaps (FVG). This indicator can automatically detect both bullish and bearish gaps on the price chart, eliminating the need for manual chart analysis.

Fair Value Gap (FVG) in a Bullish Trend

In the image below, the price chart of Brent Crude Oil in a 5-minute timeframe shows a Bullish Fair Value Gap (FVG) that formed during an upward movement. Subsequently, the price returned to this gap to rebalance the area of imbalance. This FVG, highlighted with a green box, has effectively acted as a support level, facilitating the continuation of the uptrend.Bottom of Form

Fair Value Gap (FVG) in a Bearish Trend

In the image below, the price chart of the (USD/CHF) currency pair in a 5-minute timeframe is displayed. A bearish Fair Value Gap (FVG) has formed during a downward movement. The price has returned to this gap to rebalance the area of imbalance. This FVG, highlighted with an orange box, has effectively acted as resistance, facilitating the continuation of the downtrend.

Settings of the FVG Detector Indicator

• FVG Filter: Set to (On) to filter out excessive FVGs.
• FVG Filter Type: Set it to Defensive mode to filter gaps.
• Show Demand FVG: Display bullish gaps (demand).
• Show Supply FVG: Display bearish gaps (supply).

Descriptions

• Aggressive: In this mode, the size of the middle candle should not be small. Therefore, a more significant number of gaps are eliminated.
• Defensive: In this mode, the size of the middle candle should be relatively large and primarily composed of the body. Additionally, to identify bullish gaps, the second and third candles should be positive; for bearish gaps, the second and third candles should be negative.

Summary

In the ICT (Inner Circle Trader) trading system, detecting gaps (FVGs) is crucial; therefore, traders require high precision and skill. Consequently, the Fair Value Gap (FVG) detector indicator provides an essential service by automatically identifying gaps in the price chart without manual chart analysis and with a minimal error rate. This allows traders to focus on strategy and execution rather than the meticulous task of gap identification.