Institutional SMC framework capturing high-probability continuation moves by trading retracements into discount/premium Fair Value Gaps aligned with H1 market structure.
Best executed during London and New York trading sessions when market depth and average daily range (ADR) are optimal. Avoid trading during major high-impact macroeconomic data releases (e.g., FOMC, NFP, CPI) where sudden volatility can blow past technical levels. Spread and execution costs must be tightly monitored on EURUSD and GBPUSD; ensure minimum 1:2 R:R accounts for typical spread widths.
Validate every condition prior to executing order.
H1 showed strong bullish market structure. London open printed an impulsive displacement candle leaving an M15 FVG between 1.27450 and 1.27550. Price retraced precisely to the 50% equilibrium level at 1.27500. A bullish reaction candle confirmed entry. Stop loss was placed below the FVG low at 1.27350 (15 pips). Price rallied smoothly through Asian session highs, reaching the external liquidity target at 1.27950 for a 3.0R return.
A bullish FVG formed following a minor news release. Price retraced into the gap and triggered a long entry at 1.08500 with a stop loss at 1.08380. However, high-impact US data caused institutional order flow to reverse, causing a heavy displacement candle that fully sliced through the FVG and closed below the stop loss. Strict rule enforcement kept the loss capped at 1.0% of account equity.
Copy code directly into TradingView Pine Editor
//@version=5
strategy("Fair Value Gap Continuation Strategy", overlay=true, initial_capital=10000, default_qty_type=strategy.percent_of_equity, default_qty_value=1)
// Inputs
h1_bias = input.string("Bullish", "H1 Bias", options=["Bullish", "Bearish"])
risk_reward = input.float(2.0, "Risk to Reward Ratio", minval=1.0)
sl_buffer = input.float(2.0, "Stop Loss Buffer (Pips)")
// FVG Detection Logic
is_bull_fvg = (low > high[2])
is_bear_fvg = (high < low[2])
// Plotting FVGs
var box[] bull_boxes = array.new_box()
var box[] bear_boxes = array.new_box()
if is_bull_fvg
b = box.new(left=bar_index[2], top=low, right=bar_index, bottom=high[2], bgcolor=color.new(color.green, 85), border_color=color.green)
array.push(bull_boxes, b)
if is_bear_fvg
b = box.new(left=bar_index[2], top=low[2], right=bar_index, bottom=high, bgcolor=color.new(color.red, 85), border_color=color.red)
array.push(bear_boxes, b)
// Entry Conditions
long_condition = (h1_bias == "Bullish") and is_bull_fvg and (close > open)
short_condition = (h1_bias == "Bearish") and is_bear_fvg and (close < open)
if long_condition and strategy.position_size == 0
entry_price = close
sl_price = low[2] - (sl_buffer * syminfo.mintick * 10)
tp_price = entry_price + ((entry_price - sl_price) * risk_reward)
strategy.entry("Long FVG", strategy.long)
strategy.exit("Exit Long", "Long FVG", stop=sl_price, limit=tp_price)
if short_condition and strategy.position_size == 0
entry_price = close
sl_price = high[2] + (sl_buffer * syminfo.mintick * 10)
tp_price = entry_price - ((sl_price - entry_price) * risk_reward)
strategy.entry("Short FVG", strategy.short)
strategy.exit("Exit Short", "Short Fvg", stop=sl_price, limit=tp_price)
The M15 timeframe provides an optimal balance between signal frequency and noise reduction, while H1 serves best for macro directional bias.
No. Only trade FVGs that are created with strong displacement and align directly with the higher timeframe H1 market structure.
It is strongly advised to flatten or avoid entering any new FVG trades 30 minutes before and after high-impact USD or EUR/GBP news releases.
The core edge of the Fair Value Gap Continuation Strategy model relies on the structural imbalance created when large market participants (commercial banks, liquidity providers, and central clearing desks) aggregate retail stop orders. Rather than anticipating trend continuation from arbitrary retail indicators, this systematic model identifies pre-existing liquidity pools—such as session highs/lows, Asian range extremes, or equal highs/lows (EQH/EQL)—where retail stop losses are heavily clustered.
Once a targeted liquidity sweep occurs and price aggressively rejects back inside the defined equilibrium range, an order flow displacement is confirmed through a Market Structure Break (MSB) or Change of Character (CHoCH). This sequence establishes asymmetric risk-to-reward parameters, allowing traders to enter with tight structural stops positioned outside the invalidated sweep candle.
Higher timeframe (H4/Daily) structural bias must always govern lower timeframe (M15/M5/M1) execution. Trading with the prevailing institutional order flow drastically reduces whipsaws during choppy session opens.
Always factor in spread expansion during high-impact news releases (CPI, NFP, FOMC) and daily 5:00 PM EST session rollover. Never enter within 15 minutes before Tier-1 macroeconomic events.
Move stop loss to break-even once price reaches 1.0R–1.5R target expansion or mitigates an opposing Fair Value Gap (FVG), neutralizing risk on active positions.
To successfully navigate proprietary trading evaluation stages without breaching maximum daily drawdown (typically 4%–5%) or maximum overall loss limits (8%–10%), this model must be deployed with disciplined position sizing:
On a $100,000 challenge account, limit single trade exposure to $500. This ensures you can survive a theoretical 6-trade drawdown streak while consuming less than 3% of your daily buffer.
If two consecutive setups trigger stop-loss invalidations within the same trading session, trading must be suspended for the remainder of that session to avoid revenge trading and emotional capital destruction.
Discretionary traders can execute this system manually using our pre-trade checklist above, while quantitative and algorithmic traders can deploy the Pine Script logic or connect directly to automated trading software:
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Quant Note: Backtest metrics assume standard ECN spread conditions (0.4 pips average on EURUSD) and include a 1.5-pip total round-turn commission model.
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