Fair Value Gap (FVG) — Trading Wiki

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What Fair Value Gap (FVG) means

A Fair Value Gap is a three-candle chart pattern where the wicks of the first and third candles do not overlap. The range need not be revisited and does not establish economic fair value or unfilled orders.

In depth

A Fair Value Gap (FVG) is a three-candle chart label used in Smart Money Concepts (SMC) and Inner Circle Trader (ICT) frameworks. For an upward example, candle one’s high is below candle three’s low; for a downward example, candle one’s low is above candle three’s high. The marked range depends on the selected candles, interval and data source. It does not establish economic fair value, a market-efficiency violation, unfilled orders or the identity and intentions of participants. To study it, freeze the selection rules before inspecting later prices and record both revisited and unvisited ranges.

Neither a longer candle interval, accompanying volume nor overlapping chart labels establishes a measured chance of a revisit or a profitable entry. Use the invented worksheet below to compare two possible later paths without treating either as a forecast.

Key points

• Created by a 3-candle sequence with non-overlapping wicks
• Labels a non-overlapping candle range that need not be revisited
• Not a validated entry rule or guarantee that a gap will fill

Why it matters when you are learning

Identify the three candles and the non-overlapping price range. Compare examples where price revisits the range with examples where it does not; a gap need not fill or act as support.

Worked exercise and its limits

Invent three candles where the first high is $100 and the third low is $102. Mark the $100–$102 non-overlap. Then draw a path that revisits it and one that never does. Neither proves unfilled orders or economic fair value.