Simple FVG

How it works

The Simple FVG indicator analyzes three consecutive candlesticks to detect price imbalances by comparing their highs and lows. For bullish imbalances, it checks if the second candle's high exceeds the first candle's high and the third candle's low is above the first candle's high.

For bearish imbalances, the script looks for situations where the second candle's low is below the first candle's low and the third candle's high is lower than the first candle's low. When these conditions are met, the indicator draws colored blocks on the chart to visually represent the identified price gaps.

Why it may be useful

Fair Value Gaps are crucial for traders because they reveal potential market inefficiencies and areas of price imbalance that can signal future price movements. By highlighting these gaps, traders can identify potential entry and exit points where the market may have overreacted or created temporary price discrepancies.

The visual representation makes it easier for traders to quickly recognize and interpret these market dynamics, providing insights into potential trading opportunities that might not be immediately apparent through traditional price action analysis.

When to explore it

The Simple FVG indicator is most effective in markets with clear trending or volatile conditions where price gaps are more likely to occur. Traders can use this tool across various timeframes, from short-term scalping to longer-term swing trading, to identify potential reversal or continuation patterns.

It works best when combined with other technical analysis tools and when traders have a solid understanding of market context. The indicator is particularly useful in markets like forex, stocks, and cryptocurrencies where quick price movements and temporary imbalances are common.

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