Consequent Encroachment

Consequent Encroachment (CE) is the mathematical midpoint of a Fair Value Gap. If an FVG spans from 17,248 to 17,260, the CE is 17,254. Institutional algorithms tend to retest this specific level, not the gap high or gap low, before continuing in the direction of the original displacement.

The precision matters for risk-reward math. Entering at the 100% (gap edge) level reduces fill probability but gives a tighter stop; entering at the 50% CE balances fill rate with entry quality; entering at 0% (the opposite edge) maximizes fills but widens the stop. Most Silver Bullet-style setups enter at 50% with the stop just beyond the 0% edge, typically achieving 3:1 risk-reward to the next opposing liquidity pool. If price closes fully through the FVG without respecting CE, the thesis is invalidated.