Fair Value Gap (FVG)
Price fills its own imbalance with mathematical reliability.
A Fair Value Gap is a 3-candle pattern where the wicks of candle 1 and candle 3 don't overlap, leaving a gap in the middle candle's range. Markets tend to return and fill these inefficiencies — making them high-probability targets and entries.
How to identify it
- Look for 3 consecutive candles where candle 1's high is below candle 3's low (bullish FVG) — or candle 1's low above candle 3's high (bearish).
- The 'gap' is the un-traded price range in between.
- Mark the gap as a zone. Price typically returns to fill it within 1-50 bars.
Trading rules
- Enter when price returns to the FVG zone, in the direction of the original move.
- SL beyond the candle that created the gap.
- Target the next FVG or liquidity pool in the opposite direction.
- Best when there's an order block confluence nearby.
Common pitfalls
- Trading every FVG ignores higher-timeframe trend.
- Letting price fill too deep — partial fills are also valid entries.
- FVG on news candles — these often don't fill cleanly.
When to use it
Extremely effective on M15-H1 during London and New York sessions. Less reliable in pure Asian range.
Best pairs
XAUUSD, NAS100, EURUSD
Best session
London / New York
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