Fair Value Gap Indicator MT4 | MT5

The FVG falls under the levels category of technical analysis indicators on MetaTrader platforms, designed to detect inefficiencies in the market. It is divided into two types of gaps, typically visible as a three-candle formation where the middle candle's body exceeds the wicks of surrounding candles: 

- A white gap, which occurs when the price moves upward indicating buyer dominance. 

- A yellow gap, which appears whenever the price drops presenting seller dominance.

However, traders use these gaps to anticipate price retracements, as institutions often revisit these levels to fill unexecuted orders.

• Trend continuation:

- If the price fails to close the gap entirely and resumes its original trend, traders can enter a position in the direction of the trend.

• Potential reversal: 

- If the price breaks above the recent bearish FVP and forms a bullish one, it signals a potential bullish reversal.

- If the price breaks below the recent bullish FVG and forms a bearish one, it signals a potential bearish reversal.

Furthermore, traders can use this indicator as stop-loss placements, which means placing SL above a bearish FVG when entering short and below a bullish FVG when entering long.

1* In the first trading example, as shown on the MetaTrader 4 chart, the price drops, forming bearish candles that exceed the wicks of its surrounding ones, indicating bearish FVG and signaling a short opportunity for the trader. Toward the trend's end, when a bullish FVG appears it suggests a potential bullish reversal. The price re-falls creating an indecision phase. 

When the price revisits the white gap, with the appearance of three consecutive bullish gaps, it signals the beginning of the bullish movement and a strong buying entry.

2* In the second trading example, as presented on the MetaTrader 5 chart, the price rises, forming bullish candles that exceed the wicks of its surrounding ones, indicating bullish FVG and signaling a long opportunity for the trader.

Toward the trend's end, when the price breaks below the last significant bullish FVG, it signals a strong potential trend reversal and a strong selling entry. 

It is highly recommended to combine the FVG alongside other categories of technical analysis indicators, such as trend-following, and oscillator, to make accurate trade decisions and confirm entry points.