Fair Value Gap Profiles and a Rolling Point of Control
Summary
This indicator aggregates bullish and bearish fair value gaps by price to show where imbalances have accumulated. It defines a bullish gap as a current low above the high from two bars earlier, and a bearish gap as a current high below the low from two bars earlier. Over a configurable lookback, it divides the observed price range into rows, assigns gaps by midpoint, and displays directional counts, activity, and the volume of each gap’s middle candle. A rolling point of control (POC) tracks the midpoint of the busiest row and is smoothed with a 10-bar average.
The profile is presented as a way to locate potential reaction areas, compare bullish and bearish gap activity, and observe whether the main imbalance zone is shifting. The author also describes optional heatmap and moving-average displays. The indicator is descriptive: accumulated gaps do not establish that price will revisit a level or when it might do so. The document explains its construction and settings but provides no performance test or evidence that its levels predict trades.
Key ideas
- Bullish and bearish gaps are detected by comparing a bar’s range with the range two bars earlier.
- The indicator groups gap midpoints into price rows and summarizes directional counts and middle-candle volume.
- Its rolling POC marks the busiest gap row and is smoothed over ten bars.
- High-activity rows can provide context for potential reaction zones, but do not predict whether or when price will return.
- Optional displays include an activity heatmap and a configurable moving average.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.