Education

Fair Value Gap (FVG) — the imbalance the market wants to fill

When price moves so fast it skips a zone — leaving a gap between candles — that gap is called a Fair Value Gap. The market often returns to "fill" it before continuing.

Visual pattern

Look at three consecutive candles. If the third candle's low is above the first candle's high (in a bullish move), that empty space between them is the FVG. The market jumped over fair value because the move was too aggressive.

Three M5 candles: candle 1 high = 78,000. Candle 2 = strong bullish push, opens 78,010 closes 78,180. Candle 3 low = 78,150. The gap between 78,000 and 78,150 = FVG. Price often returns there before continuing up.

Why it matters

FVGs represent price discovery imbalance. The market got greedy — buyers paid up too quickly, no sellers got to participate. Eventually price pulls back to give those sellers a chance, then continues if the thesis is intact.

This is the basis of "buy the dip" — except the dip is a specific level, not a feeling.

How we use them

Entry zone: when price returns to an FVG, we look for confirmation (volume, candle close back in our direction)
Higher timeframe FVGs (1H/4H) hold more weight than M5 ones
Combined with structure: FVG inside an order block = stronger setup

FVGs that won't fill

Not every FVG fills immediately. In strong trends, the market keeps creating new FVGs higher (or lower). Some take days or weeks to fill. Some never fill if the move was a true breakout.

Rule of thumb

If price has moved more than 5x ATR away from an FVG without filling it, treat it as exhausted. Look for closer setups.

FVGs are the market's IOUs. It usually pays them back — but the timing is the trader's job to find.