Happy Christmas – here’s a Free Fair Value Gap indicator.

We’ve been using the Fair Value Gaps (FVG) for a trading, for many moons now – there’s no doubt about their usefulness for making informed trading decision.   If you don’t know what they are, here’s a quick explanation for you …

For most of the time, when markets are open, there is a balance between buyers and sellers, that is evident from the way price hovers around price levels, as the trades are negotiated.   These areas of ‘balance’ can be quite short or last for an extended period, where price seems range-bound.  Occasionally, you’ll see a big move, with either the bulls or bears being completely dominant, hoovering up the orders so quickly that there doesn’t appear to be any negotiations between them: this is known as an ‘imbalance’.
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Such imbalances can occur with regular gaps, where there is a distinct difference between the close of one bar and the opening of the next.  You’ll also see them over the bars, and will ideally be looking something like in this example, from EURUSD daily, on the 13th Nov this year.

Bar 1 clearly had buyers and sellers in negotiation – it had a small body and apart from that being a little green, it looked like there were no winners, with the upside and downside rejection wicks.
Bar 2 was a strong bearish momentum bar.  It looked like price just bombed from the open, with few buyers found until the end of the bar.
Bar 3: clearly found buyers with the strong downside rejection but note the high of that bar, in relation to the low of bar 1 – there was no overlap there and so the area between bar 1 low and bar 3 high is referred to as the Fair Value Gap.

Obviously just reverse those three bars for bullish setups.

Price will eventually correct to test that gap – perhaps the low of it, perhaps inside such as the 50% level, or completely close it.  There’s also a chance that price will later flip that FVG to reverse the trend; such PA can be a great way of looking for new impulsive moves in a different direction.
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Below shows a couple of opportunities where you could have shorted the test of that FVG, the last being at the mid-point (the 50%) with a terrific P5 setup for confluence, and great RR down to the H4 TZ1.

I’ve shared (for free) the FVGs indies, that we use in our Skype Trading Group, in the eWH installation page (the FVG indies only work with eWavesHarmonics).  One version just shows the FVGs for the current timeframe.  The other version references a higher timeframe: we use the M15 timeframe for our M1 trades. They add terrific confluence and can offer a great perspective on what price is doing and where it might be going.  I’ve seen the FVGs work well for doing measured move projections, in the same way that I’d use a regular momentum gap, mid-move.
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Thanks for all your support in 2024.  Wishing you and yours a wonderful merry Christmas and a most prosperous 2025.