Multitimeframe Fair Value Gaps and Filtered Trend Signals
Summary
This indicator identifies bullish and bearish fair value gaps (FVGs) using candle data from a selected timeframe. It requires a gap between the current candle and prices two candles back, a confirming close, and a candle body that meets a sensitivity threshold based on average body size. Each gap is drawn as a zone with a midpoint and volume-based subdivisions. Users can treat a midpoint touch as mitigation or require price to fill the gap fully; mitigated zones are removed.
The script also builds a trend series from confirmed gaps and smooths it with a configurable low-pass filter. Its inputs control timeframe, gap sensitivity, display length, and trend responsiveness. This is an indicator and visualization method, not a tested trading strategy: the document provides no performance results or evidence that gaps predict price movement. Its higher-timeframe requests use lookahead settings, so users should check signal timing and repainting behavior before relying on plotted history.
Key ideas
- The indicator detects bullish and bearish gaps from price separation across three candles and a confirming close.
- A candle body threshold controls which gaps qualify, with a higher threshold selecting fewer, larger moves.
- Users can define mitigation as a midpoint touch or a complete fill of the zone.
- A filtered trend line summarizes the direction of detected gaps, with adjustable smoothing responsiveness.
- The script describes visual signals and controls but supplies no backtest or evidence of predictive performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.