Fair Value Gap Detection Across Chart and Intrabar Timeframes
Summary
This indicator identifies and displays bullish and bearish fair value gaps, or price imbalance zones, using chart-timeframe, higher-timeframe, and optional lower-timeframe data. Users can select the source timeframe, limit how far back to scan, choose zone colors and labels, and apply an ATR-based significance threshold to lower-timeframe gaps. The script extends active zones and tracks how much price has filled them. For chart and higher-timeframe gaps, the available fill definitions range from any touch to a midpoint test, a wick passing through and returning, or a candle body closing beyond the far edge.
The document explains the indicator’s settings and visual behavior, but gives no study of whether gaps predict continuation, reversal, or profitable trades. Fill criteria are operational choices that can produce different signals, and timeframe selection changes the zones detected. The lower-timeframe section uses its own gap and removal logic, so its treatment of filled zones may differ from the configurable chart and higher-timeframe methods. Historical detection and display limits also constrain what appears on the chart.
Key ideas
- The script marks bullish and bearish imbalance zones using price bars from selected timeframes.
- Higher-timeframe zones can be plotted on a lower-timeframe chart, while lower-timeframe gap detection is also available.
- Users can define gap mitigation through several price-touch, midpoint, wick, or candle-body conditions.
- An ATR-based threshold can filter lower-timeframe gaps, but the document provides no evidence that the zones predict returns.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.