FVG Basics Recap
A Fair Value Gap is a 3-candle pattern where the middle candle's body is so large that the wicks of candles 1 and 3 don't overlap โ creating a gap in 'fair' price where no trading occurred. These gaps represent institutional imbalance and price tends to return to fill them.
Consequent Encroachment (CE)
The 50% level of any FVG. This is the most important level within a gap. When price reaches the CE of an FVG, approximately 70% of the time it reacts. Many institutional traders place their limit orders at the CE rather than the edge of the FVG for better fills.
FVG Inversion
When an FVG is completely filled and price closes beyond it, the gap 'inverts' and acts in the opposite direction. A bullish FVG that gets completely filled and broken to the downside becomes bearish resistance. Inversions are powerful because they show where institutional intent changed.
Partial Fill vs Complete Fill
If price enters an FVG but reverses before reaching the CE, it's a partial fill โ the gap is still valid and may be retested. If price reaches the CE and reverses, the most significant institutional orders were filled. If price completely fills the gap, the institutional imbalance has been resolved.
Using FVGs as Dynamic Levels
Unfilled FVGs act as magnetic zones โ price is drawn to them. In trending markets, stack FVGs in the direction of the trend to identify the strongest institutional bias. Quantum Algo tracks FVG mitigation status in real time, showing you which gaps are still active and which have been filled.