Trader Thabza
1 min

Consequent Encroachment (CE) in ICT Trading

You place a limit order at a Fair Value Gap. Price enters the gap but doesn't reach your order at the top. It reverses at the middle. You miss the trade.

That middle point where price reversed? That's consequent encroachment. And it's where you should have placed your order.

Consequent Encroachment (CE) in ICT Trading - Featured image

In this guide:

  • What consequent encroachment is
  • Why price reacts to the 50% of FVGs
  • How to find CE on any gap or candle
  • How to use it for better entries
  • CE on different types of price ranges

Simple concept. Massive improvement to your entries.

What is Consequent Encroachment?

Consequent encroachment (CE) is the 50% midpoint of any price range, gap, or candle. It represents equilibrium within that specific area.

Most commonly applied to:

  • Fair Value Gaps (50% of the FVG)
  • Candle bodies (50% of a specific candle)
  • Candle wicks (50% of a wick)
  • Liquidity voids (50% of the void)

Why 50%?

The 50% level represents equilibrium. Fair value within fair value. When price enters any range, the midpoint is where buyers and sellers are most likely to agree on price. This makes it a natural reaction point.

In Plain Terms:

If you have a bullish FVG from 1.0900 to 1.0920, the consequent encroachment is 1.0910 (the midpoint). Price often retraces to exactly that 50% level before bouncing, rather than filling the entire gap.

Why Does Price React to CE?

Three reasons:

1. Institutional Order Placement

Smart money doesn't place all orders at the edge of a gap. They distribute orders throughout the range, with concentration at the midpoint. The 50% gives them the best average fill price.

2. Equilibrium Seeking

Markets are constantly seeking fair value. The midpoint of any imbalance IS the fair value within that imbalance. Price gravitates there naturally.

3. Partial Fill Logic

When an FVG forms from displacement, orders were left unfilled throughout the gap. The highest concentration of unfilled orders tends to sit around the middle. The CE is where the most "work" gets done.

How to Find Consequent Encroachment

On a Fair Value Gap:

For a bullish FVG:

  1. Identify the FVG (gap between Candle 1 high and Candle 3 low)
  2. Measure the distance: FVG top minus FVG bottom
  3. Divide by 2
  4. CE = FVG bottom + half the range

Or just use a Fibonacci tool from the bottom to top of the FVG. The 50% level is your CE.

Example showing Consequent Encroachment at the 50% midpoint of a Fair Value Gap

On a Candle:

For any significant candle (like an order block candle):

  1. Find the candle's high and low
  2. CE = (High + Low) / 2

This gives you the midpoint of that candle where institutions likely placed the bulk of their orders.

On a Wick:

For a candle with a long rejection wick:

  1. Measure from the body edge to the wick tip
  2. CE = midpoint of that wick

Price often reacts to the midpoint of significant wicks.

How to Use CE for Better Entries

Strategy 1: CE of a Fair Value Gap (Most Common)

Instead of placing your limit order at the edge of an FVG, place it at the 50% (CE).

For a bullish FVG:

  • Old approach: Buy limit at the TOP of the FVG (1.0920)
  • CE approach: Buy limit at the 50% of the FVG (1.0910)
  • Stop loss: Below the FVG bottom (1.0900)

Why this is better:

  • Better fill price (10 pips cheaper entry)
  • Tighter effective stop loss
  • Higher risk-to-reward ratio
  • You still get filled most of the time because price tends to reach the CE

The trade-off: Sometimes price only touches the edge and reverses without reaching CE. You'll miss some trades. But the ones you catch have better R:R. Worth it.

Strategy 2: CE as Invalidation Level

If price pushes past the CE of an FVG, the gap is likely going to get fully filled. I use CE as my "this FVG might fail" warning:

  • Price enters FVG and holds above CE = FVG is likely valid, expect bounce
  • Price enters FVG and closes below CE = FVG is weakening, might get violated
  • Price completely fills the FVG = FVG failed, look for inversion

Strategy 3: CE of Order Block Candle

When entering at an order block, use the CE of the OB candle as your refined entry:

  • Bullish OB candle range: 1.0850 (low) to 1.0870 (high)
  • CE = 1.0860
  • Place buy limit at 1.0860 instead of 1.0870 (top of OB)

This gives you a deeper fill within the OB where institutional orders are concentrated.

CE in the Silver Bullet

The Silver Bullet strategy (10:00-11:00 AM NY or 3:00-4:00 AM NY) becomes more precise with CE:

  1. FVG forms during the Silver Bullet window
  2. Instead of entering at the FVG edge, wait for price to reach the CE
  3. Enter at the 50% level
  4. Stop below the FVG

This improves your Silver Bullet R:R from typical 1:2 to 1:3 or better because your entry is deeper.

When CE Doesn't Work

1. Strong momentum through the gap

In very strong trends, price might not even retrace to the FVG edge, let alone the CE. If the trend is extremely strong, use the edge of the gap rather than CE, or you'll miss the move entirely.

2. Very small FVGs

If an FVG is only 3-5 pips wide, the CE is barely 2 pips from the edge. Not meaningful. CE works best on FVGs that are 10+ pips wide.

3. Using CE without other confluence

CE alone isn't a trade signal. It's a REFINEMENT tool. You still need market structure, liquidity context, and proper direction bias. CE just makes your entry more precise within a valid setup.

Conclusion

Consequent encroachment is the simplest upgrade to your entries. Instead of entering at the edge of a gap, enter at the middle. Better price. Tighter stop. Higher R:R.

Start applying it to every FVG you trade. Mark the 50%. Place your limit there. You'll miss some trades that only wick the edge. But the trades you catch will be significantly better. Over 100 trades, that improvement compounds.

It's not complicated. It's just precision.