Free

The Fair Value Gap Absorption Indicator by LuxAlgo is an advanced trading tool designed to help traders identify and measure the strength of price imbalances (FVGs) in real time. Unlike traditional FVG indicators that simply mark gaps, this innovative version quantifies how much of that gap has been absorbed, giving traders actionable insights into liquidity dynamics.

When price leaves a gap—an area where buyers or sellers were absent—the market often returns to “fill” that space. This process, called gap mitigation or absorption, reveals valuable information about institutional trading behavior, Supply And Demand, and potential reversals.

By integrating both historical and live data, the Fair Value Gap Absorption Indicator provides a clear visualization of when these price imbalances have been filled, helping traders anticipate turning points or continuation signals with greater accuracy.

How the Fair Value Gap Absorption Indicator Works

Identifying Bullish and Bearish FVGs

The indicator automatically highlights bullish and bearish fair value gaps on your chart:

Bullish FVGs appear when price surges upward rapidly, leaving a gap between candle wicks.

Bearish FVGs form during sharp downward moves when price leaves untraded zones below.

Each FVG zone includes a real-time percentage label that shows how much of the imbalance has been mitigated.

As price retraces into these zones, the percentage dynamically updates. When it approaches 100%, the gap is considered fully absorbed—often signaling potential reversals, breakouts, or continuation setups.

Trading with the Fair Value Gap Absorption Indicator

Reading the Mitigation Percentage

One of the most powerful features of the Fair Value Gap Absorption Indicator is the live mitigation percentage. This figure gives traders a quantifiable measure of how much liquidity has been absorbed within a gap zone.

0–50%: The gap is still active and may attract price.

50–90%: Price is in the process of absorption; traders can monitor for reaction signals.

90–100%: The gap has likely been mitigated—ideal for evaluating potential reversals or entries in the opposite direction.

Combining with Other Strategies

To maximize performance, traders often combine this indicator with:

Price Action Confirmation (e.g., candlestick patterns, structure breaks)

Volume and Liquidity Tools (like LuxAlgo Volume Profile or Order Blocks)

Smart Money Concepts (SMC) for contextual bias and precision

This combination creates a multi-layered trading system, where FVG absorption provides timing insight while other tools confirm trade direction.

Benefits of Using the Fair Value Gap Absorption Indicator

Visual Clarity: Color-coded zones and live percentages simplify complex liquidity analysis.

Smart Money Precision: Designed around institutional trading behaviors and SMC theory.

Backtesting Ready: Historical FVG data helps traders study past reactions for strategy refinement.

Time-Saving: Automatically tracks and updates FVGs without manual measurement.

Whether you trade Forex, indices, crypto, or stocks, this tool can enhance your chart analysis by showing exactly where the market has absorbed or left liquidity.

Final Thoughts

The Fair Value Gap Absorption Indicator by LuxAlgo brings unmatched clarity to the concept of gap mitigation. With live fill percentages, historical mapping, and intuitive visuals, it transforms one of the most abstract smart money concepts into a tangible trading advantage.

If you’re a supply and demand trader, an ICT methodology follower, or simply seeking to refine your market entries and exits, this indicator will elevate your decision-making process.

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