What is Fair Value Gap (FVG)?

A three-candle imbalance where price moved so fast it left untraded space — a magnet for future price.

A Fair Value Gap (FVG) is an imbalance created by a strongly impulsive move: in a three-candle sequence, the wicks of the first and third candles fail to overlap, leaving a gap of prices where almost no two-way trading happened. The market moved so aggressively in one direction that it skipped the normal auction process — one side got filled, the other side barely participated. That untraded space between the two wicks is the gap.

FVGs matter for two reasons. First, they are evidence of displacement: only genuine aggression, usually institutional, leaves imbalances behind, so an FVG validates the strength of the move that created it. Second, markets have a tendency to revisit imbalances, so an FVG often acts as a zone where a pullback finds support or resistance before the original direction resumes. In practice we treat FVGs as refined entry zones inside a structural story — a bullish FVG left by the move that broke structure is a logical place to buy the retracement, with the stop beyond the zone's origin.