// Definition
A fair value gap is a three-candle pattern where a strong middle candle leaves a gap between the wick of the first candle and the wick of the third.
Explained simply
When price moves very fast, one side gets almost no chance to trade. On the chart this shows up as a gap: the high of candle one and the low of candle three do not overlap (or the reverse in a move down).
Price often comes back to fill part of that gap before continuing, so FVGs are watched as possible reaction zones.
Tip
Not every gap gets filled, and some fill completely and keep going. Combine FVGs with structure and higher-timeframe direction.
A full video lesson on this topic is coming soon to TradingGain Academy.
For education only, not financial advice. Trading is risky and you can lose money.