JoymistaWhat Is a Fair Value Gap (FVG)?
A fair value gap is a three-candle pattern where price leaves a void: in a bullish one, the third candle’s low is above the first candle’s high.
Explained
The gap forms when the middle candle moves hard in one direction, so the wicks of the candles around it do not overlap. In SMC and ICT the gap is seen as an imbalance price may come back to fill partly or fully, though that is never certain.
Example
Example with made-up numbersThe first candle’s high is 100, the second rallies hard, and the third candle’s low is 103, so the bullish gap runs from 100 to 103.
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