What is a Fair Value Gap or a Gap? There may be different explanation or reasons of gaps In Forex, my knowledge says that gaps are not very common and they are filled when ever market gets an opportunity to fill. I am trying to figure out the fair Value gap through this indicator. Gaps are sharp breaks in price with no trading occurring in between. Gaps can happen moving up or moving down. In the forex market, gaps primarily occur over the weekend because it is the only time the forex market closes. Gaps may also occur on very short timeframes such as a one-minute chart or immediately following a major news announcement.
How I calculated the gaps Value? Calculation Method of Gap used is when (low_bar(current bar)-high_bar(two bars back))>0 and (low_bar(two bars back)-high_bar(current bar))>0 The gaps are represented by the Orange and Lime color Bar height.
Do the gaps need to be filtered? This is the most important part according to me. Yes, the gaps need to be filtered, Since there are may gaps one after another ,In This Indicator i have used a logic to filter out unnecessary Gaps. you will be seeing only major Important gaps which you need to focus on.
How gaps Helps? Gaps sometimes result in corrective price action. In other words, after the gap occurs prices have a tendency to reverse and “fill” the gap. This is what is look for.
How to use the setting of the indicator and what do they represent? This indicator setting has 4 options 1.plot major Filtered FVG of Bullish Candles When you check this option all major FGV will be filtered based on my logic of filtering the gaps 2.plot major Filtered FVG of Bearish Candles When you check this option all major FGV will be filtered based on my logic of filtering the gaps
3.Plot Bar size representing the GAPS The bars(lime and orange color) in front of candle bars are the size of the gap. 4.Plot Lines representing the GAPS You can also visualize the recent gaps through lines , you will be able to see only 3 to 5 recent gaps through line.(not able to plot all gaps through line because of the limit, so gaps are represented by the orange and lime color bars)
You can also change the resolution in setting of the indicator to get different time frame FGV.
Thanks to mickey1984 for guiding and helping for this concept idea. Have any question Feel free to ask?