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What Is a Fair Value Gap (FVG) in Trading?

Aditya · July 26, 2026
Founder of Million Candles, building AI-powered chart and options analysis tools for traders.

A fair value gap (FVG) is a three-candle pattern where the wick of the first candle and the wick of the third candle don't overlap — leaving a visible gap in between. It happens when price moves so quickly in one direction that it skips over a price range without much two-sided trading there, leaving an "imbalance" between buyers and sellers at that level.

Bullish vs. bearish FVGs

A bullish FVG forms during a sharp rally — the gap sits below current price. A bearish FVG forms during a sharp decline — the gap sits above current price. Either way, the gap marks a range where trading was thin.

Why FVGs often get "filled"

Because that price range saw little genuine two-sided trading when it was skipped over, it's treated as an area price is statistically more likely to revisit — to let buyers and sellers who missed the original move transact at that level. "Filled" doesn't mean guaranteed; it means price traded back through part or all of that range, which happens often but not always.

How traders use FVGs

  • As a potential entry zone when price pulls back into an FVG that aligns with the broader trend.
  • As a target — some traders expect price to at least tag a nearby FVG before continuing.
  • In combination with other structure — an FVG on its own, with nothing else agreeing, is a weak signal.

How Scan Mode reads this

Scan Mode's structure detection identifies genuine FVGs (real three-candle imbalances, not just any small gap) and factors whether price is interacting with one into the overall confidence score, alongside order blocks, liquidity sweeps and multi-timeframe confirmation. Like every structural factor, it's one input among several — not a standalone signal.

Educational content only. Not financial advice. Chart structure concepts do not guarantee any trading outcome.