Trading Break-of-Structure Retracements into Fair Value Gaps

Summary

This strategy looks for a fair value gap (FVG) that forms alongside a break of a confirmed swing high or low. It defines bullish and bearish gaps from a three-bar price pattern, then filters them by the middle candle’s body size and the gap’s size relative to ATR. Break confirmation can use either the closing price or a wick. The strategy stores the latest qualifying zone in each direction and waits for price to retrace to a selectable 50% or 62% level.

A long or short is entered when price touches the chosen level while remaining within the zone. The stop is placed beyond the far edge with a tick buffer, and the target is set from a configurable risk-to-reward multiple; the default shown is two to one. A setting can restrict the strategy to one open position, and traded zones are cleared after entry. The document supplies rules and adjustable parameters, but no strategy report or performance evidence. Confirmed pivots require right-side bars, and the stated trade logic does not establish that the setup is profitable in live execution.

Key ideas

• The setup combines a confirmed swing break with a three-bar fair value gap.
• ATR-based thresholds filter out smaller displacement candles and gaps.
• Entries wait for a retracement to the selected midpoint or deeper level of the gap.
• Stops sit beyond the zone boundary, while targets use a configured risk-to-reward multiple.
• The document describes rules but provides no performance results or validation.

Tags

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