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Chart Patterns

Fair Value Gap (FVG)

A three-candle pattern where the wicks of candles 1 and 3 don't overlap, leaving an imbalance zone price often returns to fill.

What is a Fair Value Gap?

A Fair Value Gap (FVG) is a price imbalance visible on a chart as a gap between the wick of the first candle and the wick of the third candle in a three-candle sequence. It represents an area where price moved so aggressively that not all orders were filled.

How to identify an FVG

  1. Look at any three consecutive candles
  2. Check if the high of candle 1 is lower than the low of candle 3 (bullish FVG) or the low of candle 1 is higher than the high of candle 3 (bearish FVG)
  3. The gap between those wicks is the Fair Value Gap

How traders use FVGs

  • Entry zones: price frequently returns to fill the gap, providing a high-probability entry
  • Support/resistance: unfilled FVGs act as magnets for price
  • Trend confirmation: FVGs that hold (don't get filled) indicate strong momentum
FVGs are a core concept in ICT (Inner Circle Trader) and Smart Money Concepts methodologies.

Related Terms

Order Block

The last opposing candle before a strong move: an area where institutional orders were placed.

Supply and Demand Zones

Price areas where imbalances between buyers and sellers caused sharp moves: stronger than traditional support/resistance.