Simple script to identify FVGs (Fair Value Gaps) on the current chart timeframe. The script differs from other FVG indicators on the Tradingview platform by using Arjos 3rd candle rule to identify which gaps are 'Breakway Gaps' and which Gaps are likely to be returned to. NOTE: As with all 'trading rules' this theory is not 100% accurate.
default settings: Breakaway Gaps = YELLOW Gaps that price may return to = GREEN Mitigated Gaps = 100% TRANSPARENT
What is a FVG: A FVG is a price area defined by a 3 candle pattern. For a bullish FVG, the low of the 3rd candle must be higher than the high of the 1st candle. This then leaves an area that is drawn as in the example below:
A bearish FVG is defined by the high of the 3rd candle being lower than the low of the 1st candle, as shown in the example below:
FVGs can act like magnets where price will either retrace to or reach for, therefore they can be used as entry points and also for take profit target levels.
If for example, a trader would like to use an FVG for an entry, it would be useful to know which FVGs are more likely for price to re-enter and which FVG will be left un-touched. FVGs that are likely to be left un-touched by price are called 'Breakaway Gaps'.
How do we define a 'Breakaway Gap': First we identify FVGs using the rules stated above, then we look to see where the 3rd candle closed in relation to the 2nd candle. For a bullish 'Breakaway Gap' we want to see the 3rd candle close above the high of the 2nd candle. An example of a bullish Breakaway Gap is shown in the example below:
A bearish 'Breakaway Gap' is defined by the close of the 3rd candle being lower than the low of the 2nd candle. An example is shown below:
How do we define an FVG that price may return to: Any gap that does not meet the above rules for a 'Breakway Gap' is therefore considered an FVG that price may return to. So for a bullish FVG that price may return to we would look to see if the close of the 3rd candle is above the high of the 2nd candle. If it is not above the high of the 2nd candle then it more likely that price will retrace into the FVG before continuing higher. An example is shown below:
A bearish gap that price may return to is defined by the close of the 3rd candle not being lower than the low of the 2nd candle. An example is shown below:
The indicator is based on the teachings of 'Arjo'. Note: breakaway gaps will only remain 'breakaway' until a liquidity level is reached. Breakaways therefore do not remain 'breakaway' forever. Users of the indicators must fully comprehend this theory before using the indicator with live markets.
Users of the script should be fully aware of this concept and also have conducted thorough backtesting using a large data set before using this indicator with live accounts.
진정한 TradingView 정신에 따라, 이 스크립트의 저자는 트레이더들이 이해하고 검증할 수 있도록 오픈 소스로 공개했습니다. 저자에게 박수를 보냅니다! 이 코드는 무료로 사용할 수 있지만, 출판물에서 이 코드를 재사용하는 것은 하우스 룰에 의해 관리됩니다. 님은 즐겨찾기로 이 스크립트를 차트에서 쓸 수 있습니다.