Fair Value Gap Retracements with Swing Targets and Capped Stops

Summary

This strategy identifies bullish and bearish fair value gaps from three-bar price relationships, keeps them active for a configurable period, and looks for a later candle to retrace into the gap. In its default mode, the retracement candle must have the opposite color from the expected trade direction. Entry levels are drawn within the gap, while prior swing highs or lows provide target levels. An optional reward-to-risk filter can reject setups that fall below a chosen ratio.

Initial stop distance is capped by a maximum point setting, and the broader script includes configurable trailing-stop and breakeven management, contract sizing, visual levels, and alerts. The provided excerpt is incomplete, so some execution and management details cannot be checked from the displayed source. It offers design logic and configurable parameters but no performance results; the method's outcomes would depend on market, timeframe, contract value, and execution assumptions.

Key ideas

• Three-bar gaps define bullish and bearish fair value zones for later retracement setups.
• The default setup requires a retracement candle of the opposing color after the gap forms.
• Swing points provide target references, with an optional minimum reward-to-risk filter.
• A maximum stop distance limits the initial stop span.
• The excerpt is incomplete and provides no backtest evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.