Trading
Fair Value Gap (FVG)
A price imbalance shown by a gap between three candles.
Full Definition
A Fair Value Gap is a smart money concept identifying price imbalances. It's a three-candle pattern where the middle candle's range doesn't overlap with the wicks of the first and third candles. These gaps often get 'filled' as price returns to rebalance. FVGs can serve as entry zones in trending markets.
Example
A strong bullish candle creates a gap where its low is higher than the previous candle's high. Price often returns to fill this FVG before continuing higher.
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