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Fair Value Gaps and Fair Value Gap Block

FVG's: The Key to Smart Money Trading

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Finding more hidden liquidity

Fair Value Gaps represent institutional price imbalances. The Fair Value Gap Block and Fair Value Gap (FVG) features in the IOF Pro Indicator helps identify price inefficiencies in the market. These gaps often signal areas where price is likely to revisit, offering potential trading opportunities. By tracking and reacting to these zones, traders can anticipate areas where the market might seek to fill liquidity voids. These options are there to create further Confluence. 

Setting up Fair Value Gaps (FVG) and Fair Value Gap Blocks
 

Settings Overview

Enable FVG Blocks

  • Activates the detection and display of Fair Value Gap Blocks.
  • FVG Blocks are highlighted as zones where price inefficiencies occurred.

Show FVGs

  • Displays individual Fair Value Gaps on the chart.
  • FVGs mark areas between candles where no trading occurred, signaling possible price imbalances.

Show Invalid FVG Blocks

  • Highlights FVG Blocks that have been invalidated (e.g., price has fully retraced through the gap).
  • Useful for distinguishing active vs. filled FVGs.

Filter min. FVG size by %

  • Filters out small FVGs by defining a minimum size (in percentage terms).
  • Example: 0.5% only shows FVGs that are at least 0.5% of the current price.

Show # of Blocks

  • Limits how many FVG Blocks are displayed on the chart.
  • Example: Setting this to 6 will only display the most recent 6 FVG Blocks.

Usage Tips

  • Scalping or Day Trading: Use smaller FVGs on lower timeframes for quick trades.
  • Swing Trading: Focus on larger FVGs on higher timeframes for stronger market reactions.
  • Combining with Breaker Blocks: FVGs near Breaker Blocks can indicate high-probability trade setups.

Note: Due to Pine Script limitations, rectangles are shared between the FVG feature and other indicator components like clustering. For critical setups, it’s recommended to prioritize Breaker Blocks over FVGs.