When the market moves with true aggression, it skips prices. One candle's low never overlaps the previous candle's high, leaving a three-candle window where only one side transacted. That window is a Fair Value Gap — an imbalance, the market's unfinished business.
Why gaps attract price
Auction logic: markets exist to facilitate trade, and prices where almost no trade occurred are unfinished auctions. Resting institutional orders, value-seeking algorithms and simple mean reversion all pull price back toward the gap — the "fill" — after which the original move frequently resumes.
Not all gaps deserve attention
Grade them like everything else: gaps born of displacement (genuine conviction candles) outrank drift; gaps aligned with the higher-timeframe trend outrank counter-trend ones; and gaps stacked inside an order block at a structural level are the elite tier — the combination that turns a zone into a scalpel.
The entry play
In an uptrend after a BOS: mark the impulse's FVG, set a limit in the gap (commonly at its midpoint — the "consequent encroachment"), stop beyond the order block below, targets at the next liquidity pool. Price dips into the imbalance, finds your order, and — when the read is right — leaves without you needing to chase anything.
When a gap fails
Price slicing through a with-trend gap without reacting is information: conviction has flipped sides. A failed FVG often marks the exact spot reversals begin — which is why gap behaviour, not just gap presence, appears inside P4 signal reasoning as part of confluence #4.
Education only — not financial advice. Trading carries risk of loss; never trade money you cannot afford to lose.
