What is a fair value gap (FVG)?
A fair value gap is a three-candle pattern in which the wicks of the first and third candles do not overlap, leaving a price range that traded only briefly, which some traders treat as an imbalance price may revisit.
How the pattern looks
Take three candles in a row during a strong move. In a rise, if the high of the first candle sits below the low of the third candle, the space between them is a bullish fair value gap. In a fall, if the low of the first candle sits above the high of the third, that space is a bearish one. The middle candle is the large one that created the gap.
The hypothesis, and its limits
The idea is that fast moves leave an imbalance: little two-way trading took place in that range, so price may later return to "fill" some of it. Traders in the smart money community watch these gaps as areas of interest.
It remains a hypothesis. Plenty of gaps are never revisited, and others get filled entirely and price carries on. A fair value gap is something to study alongside structure and risk planning, not a standalone reason to enter a trade.
Frequently asked questions
Is a fair value gap the same as a price gap on the weekly open?
No. An opening gap is a literal gap between one close and the next open. A fair value gap is a pattern within continuous candles, defined by the wicks of three candles.
What is the difference between an FVG and an order block?
An order block is a zone based on a single candle before a strong move. A fair value gap is based on three candles and marks the imbalance created during the move itself.
Does every fair value gap get filled?
No. Treat the idea as a model that sometimes describes price behavior and sometimes does not.
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