Fair Value Gap Pattern
A three-candle imbalance where price gaps between the wicks of candle one and three—an inefficiency price often revisits to "fill".
Quick Answer
A three-candle imbalance where price gaps between the wicks of candle one and three—an inefficiency price often revisits to "fill".
What Is the Fair Value Gap Pattern?
A Fair Value Gap (FVG) forms when a middle candle creates a gap between the high of the first candle and the low of the third (bullish FVG), or the low of the first and high of the third (bearish FVG). In SMC/ICT methodology, FVGs represent inefficiencies where price moved too fast, leaving unfilled orders. Price frequently retraces to these gaps before continuing. VaultCharts detects FVGs automatically and can use them as optional boosters in trade signals.
How the Fair Value Gap Forms
- 1Three consecutive candles with strong directional momentum
- 2Middle candle creates a visible gap between candle 1 and candle 3 wicks
- 3Bullish FVG: gap between candle 1 high and candle 3 low
- 4Bearish FVG: gap between candle 1 low and candle 3 high
How to Confirm the Pattern
Best Timeframes for Fair Value Gap
How to Trade the Fair Value Gap
- →Identify retracement entry zones in trending markets
- →Combine with order blocks for SMC confluence
- →Target partial or full FVG fills for entries
- →Use as optional booster in ICT/SMC signal evaluation
Common Mistakes to Avoid
Detect Fair Value Gap Automatically
VaultCharts automatically detects Fair Value Gap patterns on your charts. No manual analysis needed - the pattern is highlighted with entry zones and targets.