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What Is a Fair Value Gap (FVG)?

📅 Updated: October 2026 · ✍️ By The PipAtlas Team · All terms →

What it is — Fair Value Gap

A fair value gap (FVG) is an imbalance left in the chart by a sharp three-candle move: the wick of the first candle and the wick of the third candle do not overlap, leaving an empty band in the middle that price "skipped" without trading in. That empty band is the gap.

The thinking: price moved so fast that business was left undone — orders that would have filled inside the band never did. Traders who work with order blocks and liquidity voids watch FVGs because price frequently returns into the band before continuing in the original direction. It is one of the core smart-money concept tools, alongside structure breaks (BOS/CHoCH).

Example: candle 1 trades 1.1000-1.1010, candle 2 explodes up to 1.1060, candle 3 pulls back to only 1.1040. Between 1.1010 (candle 1 high) and 1.1040 (candle 3 low) nothing traded — a 30-pip FVG. Days later, price dips back into 1.1010-1.1040, hesitates, and rallies.

Why it matters — Fair Value Gap

  • It marks an exact price band — unlike vague "support", the gap has defined edges you can plan around
  • Paired with a stop-loss beyond the band, position size stays calculable with the position size calculator
  • It is measurable and backtestable — you can count how often price returns to FVGs on your pair instead of trusting a story
Remember: an FVG is a magnet, not a guarantee. Price often — not always — revisits the band. Count the returns on your own pair before betting on the pattern.

Frequently asked questions — Fair Value Gap

Bullish vs bearish FVG — what is the difference?

Same shape, opposite direction. A bullish FVG forms in a sharp up-move (gap below, often later bought into); a bearish FVG forms in a sharp down-move (gap above, often sold into).

Do FVGs need to be filled completely?

No. Many traders treat the first touch of the band as the event; a partial fill that holds can act just like a full one.

Which timeframe shows the best FVGs?

The pattern exists everywhere, but 1H and 4H gaps tend to matter more than 1-minute gaps, because more participants see and react to the higher-timeframe levels.

Fvg meaning

A fair value gap (FVG) is an imbalance left in the chart by a sharp three-candle move: the wick of the first candle and the wick of the third candle do not overlap , leaving an empty band in the middle that price "skipped" without trading in. That empty band is the gap.

Related terms — Fair Value Gap

Order BlockLiquidity VoidLiquidityATR

Related tools — Fair Value Gap

📦 SMC Structure Mapper (free Pine script)📖 All glossary terms

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The PipAtlas Team · Updated 12 Oct 2026

Plain-English definitions, verified examples, zero jargon-walls. Editorial policy →

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