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Fair Value Gaps (FVGs) with CVD

FVG Trading Example

A Fair Value Gap (FVG) occurs when there are inefficiencies in the market or imbalanced buying and selling pressures. These gaps often act as magnets for price, drawing the market back to "fill" the gap before continuing in the same direction. FVGs supported by key support and resistance levels are especially significant, as they offer a higher probability for successful trades. In addition to standard FVGs, the indicator also identifies Inverse Fair Value Gaps (iFVGs). An iFVG is an FVG that has been "closed" by a gap in the opposite direction. iFVGs serve as strong signals that the market may continue moving in the direction of the iFVG.

Key Features​

  • Standard FVGs: Highlight inefficiencies in the market and potential price magnets.
  • Inverse FVGs (iFVGs): Signal market continuation in the iFVG direction.
  • Cumulative Volume Delta (CVD): Adds depth to FVG analysis by incorporating buy/sell volume data for confirmation and momentum analysis.
  • Multi-Timeframe Integration: Visualize FVGs, Order Blocks, and Volume Imbalances from multiple higher timeframes.

The Power of Cumulative Volume Delta (CVD) in FVGs​

The integration of Cumulative Volume Delta (CVD) with Fair Value Gaps adds a new dimension to market analysis. By measuring the net difference between buying and selling volume within an FVG, traders gain deeper insight into market intent and strength. For example, an FVG with a high cumulative buy volume in an uptrend confirms the validity of the gap and indicates stronger upward momentum. Conversely, in a downtrend, an FVG with dominating sell volume supports the bearish bias. The FVG includes two bars on the left side, indicating the cumulative buy volume in green as well as the cumulative sell volume in red. At the right side of the FVG box the ratio of the cumulative buy/sell volume is displayed. A high ratio over 1, for example 1.5, indicates a lot of buying pressure. On the hand, a ratio far below 1, for example 0.66, indicates a lot of selling pressure. This feature not only helps traders validate FVGs but also allows them to anticipate price movement with greater accuracy.

Higher Time Frame FVGs​

The indicator enhances analysis by allowing traders to visualize FVGs from higher timeframes, which include cumulative buy/sell volume. You can configure these time frames directly in the settings:

  • Timeframe 1: Set this to your first higher time frame (e.g., 4H).
  • Timeframe 2: Set this to your second higher time frame (e.g., 1D).

For instance, if you are trading on a 5-minute chart and want to see FVGs from a 4-hour and daily chart, you can configure Timeframe 1 to 4H and Timeframe 2 to 1D.

Example Usage​

If you're trading on a 5-minute chart and want to understand the influence of 4-hour and daily FVGs, you can configure the indicator to plot these higher time frame levels directly on your chart. This multi-timeframe view ensures you never miss key areas of interest.

FVG and iFVG Example

The combination of Fair Value Gaps and Cumulative Volume Delta gives traders unparalleled insights into market structure, making it easier to identify high-probability trade setups.