Double FVG-BPR [QuantVue]The Double FVG BPR Indicator is a versatile tool that helps traders identify potential support and resistance levels through the concept of balanced price ranges.
A Balanced Price Range (BPR) is a zone on a price chart where the market has found equilibrium after a period of price imbalance.
It is identified by detecting a Fair Value Gap (FVG) in one direction, followed by an overlapping Fair Value Gap in the opposite direction.
Components of a Balanced Price Range
Fair Value Gap (FVG): A FVG occurs when there is a rapid price movement, creating a gap in the price chart where minimal trading occurs. This gap represents an imbalance between supply and demand.
Bullish FVG: A bullish FVG is identified when the low of a candle is higher than the high of a candle two periods ago, and the close of the previous candle is higher than the high of that same period.
Bearish FVG: A bearish FVG is identified when the high of a candle is lower than the low of a candle two periods ago, and the close of the previous candle is lower than the low of that same period.
Overlapping Fair Value Gap: For a BPR to be formed, an initial FVG must be followed by an overlapping FVG in the opposite direction. This creates a balanced zone where the price has moved up (or down) quickly and then moved down (or up) with similar intensity, suggesting a temporary equilibrium.
The area between the high and low points of these overlapping FVGs forms the BPR. This zone represents a temporary market equilibrium where supply and demand have balanced out after a period of significant price movement in both directions.
How to Use
Support and Resistance Levels: The upper and lower boundaries of the BPR act as dynamic support and resistance levels. Traders can use these levels to place buy and sell orders, anticipating that the price may find support or face resistance within these zones.
Trend Reversal and Continuation: The BPR can signal potential trend reversals or continuations.
If the price moves back into the BPR after a breakout, it may indicate a reversal. Conversely, if the price breaks out of the BPR with strong momentum, it may signal a trend continuation.
