Zones
Fair Value Gap (FVG)
A price imbalance created by an impulsive move where no fair exchange occurred between buyers and sellers. Identified as a gap between three consecutive candles.
Related indicator: FVG Volume MultiFrame View indicators
What Is a Fair Value Gap
A Fair Value Gap (FVG) is a visible imbalance on the chart formed by three consecutive candles, where the wick of the first candle does not overlap with the wick of the third candle. This empty space represents a zone where price moved so fast that no fair bilateral negotiation took place.
How to Identify It
- Look for three consecutive candles with a strong move.
- Bullish FVG: the high of candle 1 does not touch the low of candle 3. The gap sits between those two levels.
- Bearish FVG: the low of candle 1 does not touch the high of candle 3. The gap sits between those two levels.
- The larger the FVG, the stronger the imbalance and the more likely price is to return and fill it.
How to Use It in Trading
- Price tends to return to “fill” or “mitigate” FVGs before continuing in the original direction.
- Use FVGs as entry zones: wait for price to retrace to the 50% level of the FVG (known as consequent encroachment).
- Combine FVGs with Order Blocks for high-probability confluences.
- FVGs that form during killzone hours (London, NY) tend to be more significant.
Types of FVG
- Respected FVG: price touches the edge of the gap and bounces. A sign of trend strength.
- Partially filled FVG: price enters the 50% level of the gap (CE). The optimal entry zone.
- Invalidated FVG: price trades completely through the gap and closes beyond it. The FVG loses its validity.