Trading Order Block and Fair Value Gap Confluence in the New York Session

Summary

This strategy combines order block patterns with fair value gaps to generate directional signals during New York trading hours. A bullish setup looks for two bearish candles followed by rising closes, while a bearish setup looks for the reverse. It also identifies gaps by comparing the current candle’s high or low with the corresponding price from two candles earlier. Trades require both structures to point in the same direction and the time filter to be active.

The described trade management uses a stop at a prior candle’s extreme and a target set at twice the entry-to-stop distance. The document provides a short backtest configuration for ETH/USDT futures on three-minute candles, but reports no performance statistics, so it does not establish profitability. It also notes risks from news-driven volatility, reduced liquidity, signal delay while candles complete, and patterns losing relevance as market behavior changes. Suggested extensions include volatility-based stops, confirmation across timeframes, volume or sentiment filters, and machine learning; these are proposals rather than tested improvements.

Key ideas

• Signals require an order block and a same-direction fair value gap during the specified New York sessions.
• Bullish and bearish gaps are identified by comparing the current candle with the candle two periods earlier.
• The proposed target is twice the distance from entry to the stop level.
• The supplied backtest configuration alone gives no evidence of strategy performance.
• The document identifies event volatility, execution conditions, delayed signals, and changing market structure as risks.

Tags

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