Fair value gap (FVG)

FVG · imbalance

DefinitionA three-candle gap where the wicks of the first and third candles don’t overlap, left by a fast move.

In a fast move up, a fair value gap is the space between the high of the first candle and the low of the third candle, when they don’t overlap. The middle candle moved so fast that little trading happened inside that range.

Many traders expect price to come back and fill part of the gap before continuing. Like any zone, it works better with the trend and as one piece of a plan with a clear invalidation.