What is a fair value gap (FVG)?
A fair value gap is a three-candle pattern where a strong middle candle moves so fast that the wicks of the candles on either side don't overlap. The empty space between them is the 'gap': a price range where the market traded in only one direction.
How to spot it
- 1Find a large, decisive candle (displacement).
- 2Compare the wick of the candle before it with the wick of the candle after it.
- 3If they don't overlap, the space between is the fair value gap.
- 4Gaps that form with a break of structure are generally considered more meaningful.
Common mistakes
- ✕Marking every small gap; most are noise on low timeframes.
- ✕Ignoring the trend; a gap against the higher-timeframe direction is weaker context.
- ✕Assuming price must return to fill the gap; many never do.
The ICT lens checks whether a fair value gap was left behind by displacement and whether price is returning to it, as one of six graded rules.
Educational content only. Not financial advice. No pattern or concept guarantees any outcome.
Keep learning
A liquidity sweep happens when price pushes just beyond an obvious swing high or low, where many stop orders sit, and then quickly reverses back inside.
In smart money concepts, an order block is the last down candle before a strong move up (bullish) or the last up candle before a strong move down (bearish).
Market structure is the sequence of swing highs and lows.
Support is an area where buying has stepped in before, slowing or reversing declines.
A demand zone is a base that price left sharply upward; a supply zone is a base price left sharply downward.
A breakout and retest is a three-step sequence: price breaks through a well-defined level, comes back to test it from the other side, and holds.
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