Fair value gaps are a fundamental price action concept that shows us the imbalance zones in the market. Based on our analysis, we can set targets for plan entries.
If you have any questions related to this code of fair value gaps in general please let me know below.
Below is the source code written in Pinescript.
Code: Select all
//@version=5
indicator("Fair Value Gap (FVG) Finder", overlay=true)
// Function to detect FVGs
fvg_detect(c1_high, c1_low, c3_high, c3_low) =>
bearish_fvg = c1_low > c3_high // Condition for bearish FVG
bullish_fvg = c1_high < c3_low // Condition for bullish FVG
[bullish_fvg, bearish_fvg]
// Retrieve highs and lows of the three-candle sequence
candle1_high = high[2] // High of Candle 1 (two bars ago)
candle1_low = low[2] // Low of Candle 1 (two bars ago)
candle3_high = high // High of Candle 3 (latest bar)
candle3_low = low // Low of Candle 3 (latest bar)
// Detect bullish and bearish FVGs
[bullish_fvg, bearish_fvg] = fvg_detect(candle1_high, candle1_low, candle3_high, candle3_low)
// Plot bullish FVG
if bullish_fvg
line.new(x1=bar_index - 2, y1=candle1_high, x2=bar_index, y2=candle1_high, color=color.new(color.green, 80), width=2, extend=extend.right)
line.new(x1=bar_index - 2, y1=candle3_low, x2=bar_index, y2=candle3_low, color=color.new(color.green, 80), width=2, extend=extend.right)
box.new(left=bar_index - 2, top=candle1_high, right=bar_index, bottom=candle3_low, bgcolor=#0fdb15d0, border_color =#0fdb15d0)
// Plot bearish FVG
if bearish_fvg
line.new(x1=bar_index - 2, y1=candle1_low, x2=bar_index, y2=candle1_low, color=color.new(color.red, 80), width=2, extend=extend.right)
line.new(x1=bar_index - 2, y1=candle3_high, x2=bar_index, y2=candle3_high, color=color.new(color.red, 80), width=2, extend=extend.right)
box.new(left=bar_index - 2, top=candle1_low, right=bar_index, bottom=candle3_high, bgcolor=#df1212cc , border_color =#df1212cc)