Fair Value Gap (FVG)
A Fair Value Gap (FVG) is a price gap inside three candles: the wicks of the first and third candles do not overlap. In SMC price often returns to this zone, but not always.
How it works
Look at three candles in a row. If the middle candle is big and fast, and the high of the first candle sits below the low of the third, an empty stretch is left between them. That is a bullish FVG. A bearish one is the mirror: the low of the first candle is above the high of the third.
The idea is that price moved through this area too fast and little trading happened there. That is called an imbalance. Smart Money Concepts (SMC) and ICT traders expect price to come back, "fill" the gap and possibly continue from there.
Traders use an FVG as an entry zone or as a target. It works best with context: the trend direction, market structure and a liquidity sweep. A gap on the chart on its own is not a reason to trade.
On the BTC hourly chart the first candle has a high of 60,000, the second rallies hard, and the third has a low of 60,600. The 60,000–60,600 zone is a bullish FVG. If price later pulls back into it and reacts, a trader may look for a long with a stop below 60,000.
The classic mistake is spotting an FVG on every chart and entering every gap. Lower timeframes have dozens of them, and price cuts straight through many. Only take FVGs that line up with the higher-timeframe trend, and always put a stop beyond the zone.
Questions and answers
What is a fair value gap in simple terms?
It is an empty stretch on the chart that price rushed through. You see it in three candles: the wicks of the first and third do not touch.
Does price always fill a fair value gap?
No. Price often returns to the zone, but some gaps stay open for a long time. That is why you need a stop-loss.
What is the difference between an FVG and an order block?
An FVG is the gap between the wicks of three candles. An order block is the last candle before a strong impulse. They often sit close together and are used as a pair.
Related terms
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Updated: 2026-10-19