Trading Concepts & Market Structure Guide
Fair Value Gaps (FVGs)
What is a Fair Value Gap?
A Fair Value Gap (FVG) is a price range where limited or no trading occurred, typically caused by an aggressive price movement that creates an imbalance between candles.
- Usually seen as a gap between Candle 1 and Candle 3, with Candle 2 rapidly pushing through the range.
Why FVGs Matter
Traders — especially institutional ones — often revisit these gaps, making them useful for:
- Planning trade entries or re-entries
- Identifying support/resistance
- Analyzing liquidity behavior
Types of FVG
- Bullish FVG: Forms during a strong upward move
- Bearish FVG: Forms during a strong downward move
Example:
- Candle 1 closes at 1000
- Candle 2 opens at 1010 and closes at 1030
Candle 3 opens at 1035
→ FVG between 1000 and 1035
FVGs in Sparx Tools
In Sparx Lacuna Pro:
- Bullish FVGs = Green boxes (default)
- Bearish FVGs = Red boxes (default)
- Gaps are automatically removed when filled (can be toggled)
- All box and border colors are fully customizable
Break of Structure (BOS)
What is a BOS?
A Break of Structure confirms trend continuation.
- Uptrend: BOS = Creation of a new Higher High (HH)
- Downtrend: BOS = Creation of a new Lower Low (LL)
Why BOS Is Important
Used to:
- Confirm the trend direction
- Support continuation-based entries
- Strengthen FVG or CHoCH setups
How to Recognize BOS
- Key high or low is broken with momentum
- Often followed by retracement or continuation
- May be triggered by a liquidity sweep
BOS in Sparx Tools
In Sparx Lacuna Pro:
- Bullish BOS = Green line above break (default)
- Bearish BOS = Red line below break (default)
- Fully customizable in settings (color, line style, labels)
Change of Character (CHoCH)
What is a CHoCH?
Change of Character (CHoCH) marks the first sign of a potential trend reversal:
- Uptrend: CHoCH = Break of a previous Higher Low (HL)
- Downtrend: CHoCH = Break of a previous Lower High (LH)
Why CHoCH Matters
Used to:
- Detect early reversals
- Confirm intent shift in liquidity
- Combine with FVGs and order blocks for confluence
How to Recognize CHoCH
- Recent HL or LH is broken against current trend
- Structure shifts in opposite direction
- Often followed by BOS in the new direction
CHoCH in Sparx Tools
In Sparx Lacuna Pro:
- Bullish CHoCH = Green line above break (default)
- Bearish CHoCH = Red line below break (default)
- All elements (color, text, line) are fully customizable
Supply and Demand Zones
What Are Supply and Demand Zones?
- Supply Zone: Area of previous strong selling pressure
- Demand Zone: Area of previous strong buying pressure
These zones act as areas of interest for:
- Setting trade entries
- Establishing stop-loss or take-profit levels
- Predicting price reaction and liquidity flow
How They Form
- Demand Zone: Strong bullish move following price consolidation
- Supply Zone: Strong bearish move following price consolidation
- Often include an FVG or imbalance
Supply & Demand in Sparx Tools
In Sparx Lacuna Pro:
- Demand = Green boxes (default)
- Supply = Red boxes (default)
- Zones can display across multiple timeframes (e.g. 1H, 4H, Daily)
- Zones are auto-removed once fully filled (optional)
- All visual settings are user-configurable
For further assistance or tool setup support, reach out to our team at support@getsparx.io.