FVG ChannelThis script is a modified and expanded derivative of “FVG Channel ” by LuxAlgo. The original FVG detection, active-level aggregation, close-based mitigation, smoothed channel concept, and internal channel-level framework were adapted from that work. This version adds confirmed-bar processing, capped FVG storage, normalized and double-smoothed boundaries, recovery-based signal logic, configurable overextension requirements, signal cooldowns, optional volume confirmation, separate standard and Super classifications, alerts, and simplified historical target/stop measurements. The original work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International licence, and this modified version is distributed under the same licence. It is intended for noncommercial use, and changes from the original implementation have been clearly identified.
### Overview
FVG Channel converts active Fair Value Gap reference levels into a smoothed adaptive price channel.
The script identifies confirmed bullish and bearish FVG structures, stores one reference level from each active gap, removes levels after close-based mitigation, and averages the remaining bullish and bearish references.
These averages are smoothed twice to create the channel boundaries. The channel also includes three configurable internal levels, confirmed recovery signals, optional volume confirmation, standard and Super signal classifications, alerts, target and stop reference lines, and simplified historical outcome tables.
The indicator is designed to help users examine:
* areas where multiple unmitigated FVG references are concentrated;
* price overextension beyond the adaptive channel;
* confirmed recovery back inside the channel;
* stronger wick-extension conditions;
* historical target and stop outcomes under user-selected settings.
The script is intended for standard candlestick or bar charts. It does not predict future prices and does not provide automatic trade instructions.
## Fair Value Gap detection
A bullish FVG is identified when:
* the current low is above the high from two bars earlier;
* the middle candle closes above that earlier high;
* the current chart bar is confirmed.
For each bullish FVG, the script stores the high from two bars earlier as its reference level.
A bearish FVG is identified when:
* the current high is below the low from two bars earlier;
* the middle candle closes below that earlier low;
* the current chart bar is confirmed.
For each bearish FVG, the script stores the low from two bars earlier as its reference level.
The script stores one reference level from each detected FVG. It does not draw or store the complete upper and lower boundaries of every gap zone.
## FVG mitigation
Bullish and bearish FVG references remain active until they are mitigated by a confirmed close.
A bullish FVG reference is removed when price closes below its stored level.
A bearish FVG reference is removed when price closes above its stored level.
Wick contact alone does not remove an FVG reference.
This close-based method is intended to reduce the effect of temporary wick penetration, but it can also keep a level active after price has partially traded through the original gap area.
## Maximum stored FVG levels
The Maximum Stored FVG Levels setting limits the number of bullish and bearish references stored by the script.
When the selected limit is exceeded, the oldest stored reference is removed.
This prevents the arrays from expanding indefinitely on long chart histories.
A larger limit allows more historical FVG references to contribute to the channel but may increase processing requirements.
## Adaptive channel calculation
The active bullish FVG references are averaged.
The active bearish FVG references are averaged separately.
Each average then passes through two consecutive simple moving-average smoothing calculations.
The final channel boundaries are normalized so that:
* the higher smoothed reference becomes the upper boundary;
* the lower smoothed reference becomes the lower boundary.
This prevents the channel boundaries from becoming visually reversed.
When no active bullish or bearish FVG reference is available, the script temporarily substitutes a simple moving average of price for that side of the calculation.
The resulting channel is therefore influenced by active FVG structure when available and by smoothed price when no active reference exists.
## Smoothing Length
The Smoothing Length controls both smoothing passes applied to the FVG reference averages.
A shorter length:
* reacts more quickly to changes in the active FVG structure;
* produces a more responsive channel;
* may create more frequent recovery conditions;
* can be more sensitive to short-term movement.
A longer length:
* creates smoother boundaries;
* reacts more slowly;
* emphasizes broader FVG concentration;
* may produce fewer signals.
The same length is used for both smoothing passes.
## Upper and lower boundaries
The red upper boundary represents the higher of the two smoothed FVG reference calculations.
The green lower boundary represents the lower of the two smoothed calculations.
The boundaries are not traditional support and resistance lines and should not be treated as guaranteed reversal levels.
They represent smoothed averages derived from active FVG references and the price-SMA fallback logic.
## Internal channel levels
The script calculates three configurable levels between the lower and upper boundaries.
The default values are:
* Internal Level 1: 0.236;
* Internal Level 2: 0.500;
* Internal Level 3: 0.786.
Each value represents a proportional position within the current channel range.
For example, Internal Level 2 at 0.500 represents the midpoint between the lower and upper boundaries.
The levels must satisfy:
* Level 1 is below Level 2;
* Level 2 is below Level 3.
All internal-level settings are limited to values between 0 and 1.
The script produces an error when the levels are entered in an invalid order.
## Confirmed recovery signals
The signal system looks for price to remain outside the channel and then recover back inside it.
Signals are confirmed only after the chart bar closes.
### Bullish recovery
A bullish recovery condition requires:
* price to close below the lower boundary for the selected minimum number of consecutive bars;
* price to subsequently cross and close back above the lower boundary;
* the bullish signal cooldown to have expired;
* the optional volume condition to pass.
A green BULL label marks a standard bullish recovery.
This condition indicates that price remained below the adaptive channel and then recovered above its lower boundary.
It does not guarantee that price will continue higher.
### Bearish recovery
A bearish recovery condition requires:
* price to close above the upper boundary for the selected minimum number of consecutive bars;
* price to subsequently cross and close back below the upper boundary;
* the bearish signal cooldown to have expired;
* the optional volume condition to pass.
A red BEAR label marks a standard bearish recovery.
This condition indicates that price remained above the adaptive channel and then recovered below its upper boundary.
It does not guarantee that price will continue lower.
## Minimum Closes Outside Channel
This setting controls how many consecutive confirmed closes must occur beyond a channel boundary before a recovery signal becomes eligible.
For a bullish condition, the required closes must occur below the lower boundary.
For a bearish condition, the required closes must occur above the upper boundary.
A smaller value:
* allows faster recovery signals;
* produces more frequent conditions;
* may include shallower overextensions.
A larger value:
* requires price to remain outside the channel longer;
* produces fewer conditions;
* focuses on more persistent overextensions.
## Standard and Super signals
Each recovery is classified as either a standard signal or a Super signal.
The classifications are mutually exclusive. A Super signal does not also produce a standard label or standard alert.
### Super Bull recovery
A bullish recovery becomes a Super Bull condition when the signal candle’s lower wick extends beyond the lower boundary by at least the configured Super Signal Wick Extension percentage.
A lime SBULL label identifies this condition.
### Super Bear recovery
A bearish recovery becomes a Super Bear condition when the signal candle’s upper wick extends beyond the upper boundary by at least the configured Super Signal Wick Extension percentage.
An orange SBEAR label identifies this condition.
The Super classification measures wick distance beyond the relevant boundary.
It does not independently measure trend strength, probability, expected return, or future reversal quality.
A higher Super threshold creates fewer Super classifications.
A lower threshold creates more frequent Super classifications.
## Signal cooldown
The Signal Cooldown setting controls the minimum number of chart bars required between signals of the same direction.
Bullish and bearish cooldowns are tracked independently.
For example, a bullish signal does not reset the bearish cooldown.
A value of zero allows another same-direction signal as soon as all other requirements are satisfied.
The cooldown reduces repeated signals but does not change the underlying FVG channel.
## Volume confirmation
Volume confirmation is optional.
When enabled, a recovery signal requires current reported volume to be greater than:
* average volume over the selected Volume Lookback;
* multiplied by the Volume Confirmation Multiplier.
A multiplier of 1.0 requires volume to exceed its average.
A multiplier above 1.0 requires comparatively higher volume.
A multiplier below 1.0 creates a less restrictive condition.
Volume information differs between markets and data providers. Some symbols provide centralized transaction volume, while others may provide exchange-specific or tick-volume data.
The volume condition should therefore be interpreted according to the selected market.
## Signal-bar background
Optional background highlighting can be enabled for confirmed signal bars.
Separate colours are available for:
* Bull signals;
* Super Bull signals;
* Bear signals;
* Super Bear signals.
The background highlight is visual only and does not change the signal calculations.
## Signal labels
The indicator displays four possible labels:
* BULL: standard bullish recovery;
* SBULL: Super bullish recovery;
* BEAR: standard bearish recovery;
* SBEAR: Super bearish recovery.
The Signal Offset setting controls the vertical distance between each label and the signal candle.
Labels are plotted for every confirmed signal, even when another historical outcome measurement is already active.
## Alerts
Separate alerts are available for:
* Bull Recovery;
* Super Bull Recovery;
* Bear Recovery;
* Super Bear Recovery.
Standard and Super alerts are exclusive.
Alerts are based on confirmed chart bars, so a signal is not finalized until the bar closes.
When creating a PulseWire alert, using Once Per Bar Close is recommended for consistency with the script’s confirmed-bar logic.
## Historical target and stop measurements
The Historical Outcome Settings provide simplified target and stop measurements for confirmed signals.
This system is not a full PulseWire strategy backtest.
Only one unresolved outcome can be tracked at a time across all four signal types.
Signals can still appear while another outcome is active, but those later signals will not begin additional outcome measurements.
## Target Mode
The available Target Modes are:
* Disabled;
* Percentage;
* Internal Level 1;
* Internal Level 2;
* Internal Level 3.
### Disabled
Historical outcome tracking is turned off.
Signal labels and alerts continue to operate.
### Percentage
The target is calculated as a percentage of the signal bar’s closing price.
Separate target settings are available for standard and Super signals.
### Internal Level targets
The selected internal channel level is used as the target only when it lies beyond the signal close in the expected direction.
For a bullish signal, the internal target must be above the signal close.
For a bearish signal, the internal target must be below the signal close.
When the selected internal level is not positioned in the required direction, no historical outcome is started for that signal.
This prevents the script from creating an invalid target behind the recorded entry price.
## Standard and Super target settings
When Percentage mode is selected:
* Standard Target is used for BULL and BEAR signals;
* Super Target is used for SBULL and SBEAR signals;
* Standard Stop is used for BULL and BEAR signals;
* Super Stop is used for SBULL and SBEAR signals.
Targets and stops are measured from the confirmed signal bar’s closing price.
They are research references only and are not automatically submitted as orders.
## Outcome evaluation
The signal bar’s closing price becomes the recorded reference price.
Target and stop evaluation begins on the following chart bar.
The signal candle’s earlier high and low are therefore not used to determine the outcome after the entry has been recorded at its close.
For bullish measurements:
* the target is reached when a later high touches or exceeds the target;
* the stop is reached when a later low touches or falls below the stop.
For bearish measurements:
* the target is reached when a later low touches or falls below the target;
* the stop is reached when a later high touches or exceeds the stop.
## Target and stop on the same bar
When both the target and stop are touched during the same evaluation bar, the script records a stop outcome.
This conservative rule is used because the script cannot determine the exact intrabar order from standard chart-bar data.
A lower-timeframe price path is not reconstructed.
## Target and stop reference lines
The most recently created target and stop levels can be displayed temporarily on the chart.
The Target/Stop Line Length controls how many bars these references remain visible after they are created.
The display duration does not control how long the historical outcome remains active.
An outcome continues to be evaluated until its target or stop is reached, even after the visual lines disappear.
## Standard outcome table
The standard table reports completed BULL and BEAR measurements.
The format is:
* T: target outcomes;
* S: stop outcomes;
* percentage: target outcomes divided by completed target and stop outcomes.
For example:
BULL T/S: 12/8 (60%)
This means that 12 completed bullish measurements reached their targets and 8 reached their stops.
## Super outcome table
The Super table reports the same measurements separately for SBULL and SBEAR signals.
Super results are not combined with standard signal results.
This allows users to compare the script’s wick-extension classification with the standard recovery classification.
## Meaning of the table percentages
The percentages are simplified historical target-outcome ratios.
They are not:
* guaranteed win rates;
* expected future returns;
* probability forecasts;
* full strategy results;
* proof of profitability.
The calculations do not account for:
* commissions;
* slippage;
* spread;
* liquidity;
* position sizing;
* portfolio equity;
* order rejection;
* realistic execution;
* overlapping positions;
* complete intrabar sequencing.
Only one unresolved measurement is tracked at a time, so not every displayed signal is represented in the tables.
Results depend on the selected:
* symbol;
* timeframe;
* available chart history;
* FVG structure;
* smoothing length;
* minimum outside-bar requirement;
* cooldown;
* volume settings;
* Super threshold;
* target mode;
* target settings;
* stop settings.
Historical results do not imply future performance.
# How to Use
## 1. Use a standard chart
Apply FVG Channel to a standard candlestick or bar chart.
Avoid evaluating signal performance on synthetic chart types such as:
* Heikin Ashi;
* Renko;
* Kagi;
* Point and Figure;
* Range charts.
Synthetic chart prices may not represent directly tradable market prices.
## 2. Begin with the default channel settings
The default Smoothing Length is 20.
This gives the active bullish and bearish FVG reference averages two smoothing passes of 20 bars each.
Observe how the channel behaves on the selected symbol before reducing or increasing the setting.
Use a shorter length when a faster channel is preferred.
Use a longer length when a slower and smoother structure is preferred.
## 3. Read the channel position
Use the upper and lower boundaries to understand where price is trading relative to the smoothed active FVG structure.
Price inside the channel indicates that it is between the two adaptive boundaries.
Price below the lower boundary indicates a lower-channel overextension.
Price above the upper boundary indicates an upper-channel overextension.
An overextension is not a signal by itself.
The script waits for a confirmed recovery back inside the channel.
## 4. Wait for the required outside closes
The default Minimum Closes Outside Channel setting is 5.
For a bullish setup, price must close below the lower boundary for at least five consecutive confirmed bars.
For a bearish setup, price must close above the upper boundary for at least five consecutive confirmed bars.
Changing this value adjusts how persistent the overextension must be.
## 5. Wait for the confirmed recovery
After the required outside closes:
* a bullish condition requires price to cross and close back above the lower boundary;
* a bearish condition requires price to cross and close back below the upper boundary.
The signal is confirmed only when the candle closes.
A temporary intrabar move through the boundary does not create a finalized signal unless the close satisfies the condition.
## 6. Distinguish standard and Super signals
Use the signal labels to identify the classification.
* BULL is a standard bullish recovery.
* SBULL is a bullish recovery with sufficient lower-wick extension.
* BEAR is a standard bearish recovery.
* SBEAR is a bearish recovery with sufficient upper-wick extension.
A Super signal is not automatically better than a standard signal.
It only means that the wick-extension threshold was reached.
## 7. Adjust the Super threshold carefully
The default Super Signal Wick Extension is 15%.
This percentage is measured relative to the relevant channel-boundary price.
A higher value makes Super signals rarer.
A lower value makes them more common.
Review the scale and volatility characteristics of the selected market before changing this setting significantly.
## 8. Use volume confirmation when appropriate
Enable Volume Confirmation when signals should require reported volume above a selected threshold.
A practical starting point is:
* Volume Lookback: 20;
* Volume Confirmation Multiplier: 1.0.
This requires current volume to be above its 20-bar average.
Increase the multiplier for a stricter requirement.
Volume confirmation may be more useful on instruments with reliable volume data.
## 9. Review the internal levels
The internal channel levels can be used as visual reference points within the adaptive range.
The default levels represent approximately:
* 23.6%;
* 50%;
* 78.6%.
They can help show where price is positioned inside the current channel.
They are not guaranteed support, resistance, or profit targets.
## 10. Review wider market context
Before interpreting a recovery label, examine:
* the broader trend;
* nearby support and resistance;
* volatility;
* channel direction;
* channel width;
* recent price structure;
* active session conditions;
* available volume quality;
* major news or event risk.
A recovery signal against a strong directional trend can fail.
The indicator should not be used as the only reason for a market decision.
## 11. Configure the signal cooldown
The default cooldown is 50 bars for signals of the same direction.
Reduce the setting when more frequent same-direction signals are desired.
Increase it when repeated signals should be restricted.
Bullish and bearish cooldowns operate independently.
## 12. Configure historical measurements
Select Percentage mode for simple percentage-based target and stop research.
A practical starting configuration is:
* Standard Target: 1%;
* Standard Stop: 1%;
* Super Target: 2%;
* Super Stop: 2%.
These are examples only and are not recommended settings for every market or timeframe.
Select an Internal Level target when the channel’s own internal structure should be used.
Remember that a measurement is skipped when the chosen level is not beyond the signal close in the correct direction.
## 13. Read the target and stop lines
When a valid outcome starts:
* the green line represents the target;
* the red line represents the stop.
The lines remain visible for the selected number of bars.
Their disappearance does not necessarily mean the outcome has been resolved.
## 14. Read the tables correctly
The standard table separates BULL and BEAR results.
The Super table separates SBULL and SBEAR results.
T means completed target outcomes.
S means completed stop outcomes.
The percentage represents targets divided by completed targets and stops.
Do not interpret the percentage as a guaranteed win rate.
## 15. Understand one-active-outcome tracking
The script tracks only one unresolved outcome at a time.
A new signal may be displayed while an older measurement remains active.
However, the newer signal will not be added to the historical table until the previous measurement has ended and another eligible signal occurs.
This prevents overlapping measurements but means the table does not measure every displayed signal.
## 16. Create alerts
Create separate PulseWire alerts for the conditions you want to receive:
* Bull Recovery;
* Super Bull Recovery;
* Bear Recovery;
* Super Bear Recovery.
Use Once Per Bar Close to match the script’s confirmed-signal behaviour.
Test alerts on the intended symbol and timeframe before relying on them operationally.
## Suggested starting process
1. Apply the indicator to a liquid symbol on a standard candlestick chart.
2. Keep the default Smoothing Length of 20.
3. Keep Minimum Closes Outside Channel at 5.
4. Leave volume confirmation disabled initially.
5. Observe several BULL and BEAR recovery examples.
6. Compare standard and Super signals.
7. Review whether signals occur with or against the broader trend.
8. Enable volume confirmation and compare the difference.
9. Use the historical tables only as simplified research measurements.
10. Test multiple symbols and timeframes before drawing conclusions.
## Important limitations
* The script stores one reference level from each FVG, not the entire FVG zone.
* FVGs are confirmed only after the relevant chart bar closes.
* FVG mitigation requires a confirmed close through the stored reference.
* Wick contact alone does not remove an FVG reference.
* Active bullish and bearish references are equally weighted.
* The channel uses a price-SMA fallback when no active FVG reference is available.
* Double smoothing introduces delay.
* Recovery signals do not guarantee reversals.
* Super classifications measure wick extension only.
* Volume quality varies across markets and data providers.
* Only one historical outcome is tracked at a time.
* Not every displayed signal is included in the tables.
* Same-bar target and stop contact is recorded as a stop outcome.
* Historical measurements do not include realistic execution costs.
* Internal target modes may skip signals when the selected level is not positioned beyond the signal close.
* Historical table results do not guarantee future performance.
FVG Channel is an analytical and research tool. It does not provide financial advice, guaranteed signals, or guaranteed results.
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