Fair Value Gap (FVG)

Also known as: FVG, Fair Value Gap, Fair Value Gaps, FVG (Fair Value Gap)

A Fair Value Gap (FVG) is a three-candle imbalance where price moves so fast it leaves a gap between the first candle's high/low and the third's — a footprint of aggressive institutional order flow in ICT (Inner Circle Trader) and Smart Money Concepts methodology. Price frequently returns to 'fill' these gaps, offering entries in the direction of the original impulse.

This hub collects every FVG-based strategy decoded on Strategy Decoder, usually combined with order blocks, liquidity sweeps, premium/discount zones and market structure shifts. Each strategy turns those discretionary concepts into objective rules — gap definition, mitigation criteria, entry, stop and target — with Pine Script ready for TradingView backtesting.

Frequently asked questions

What is a Fair Value Gap in technical analysis?

A Fair Value Gap (FVG) is a market inefficiency or imbalance that occurs when price moves sharply, creating a disconnect between buyers and sellers. In technical terms, it is a three-candle formation where the first candle's wick and the third candle's wick do not touch, leaving a gap in the second candle's range. Traders view these zones as areas of unequal liquidity. The market often treats these gaps as targets, returning to fill the imbalance before continuing in the direction of the original impulsive move.

How do you trade using the FVG indicator?

Traders typically use Fair Value Gaps as entry triggers or zones of interest. When a gap is created during a bullish breakout, it establishes a support zone where price may retraced to pick up unfilled orders. The most common strategy involves waiting for a 'mitigation' or 'fill,' where price returns to the FVG area, followed by a rejection signal in the original trend direction. It is best used in conjunction with market structure breaks and higher-timeframe analysis to ensure you are trading with the prevailing momentum.

When is the FVG indicator most effective for traders?

The FVG indicator is most reliable when it aligns with other institutional footprints, such as Order Blocks or liquidity sweeps. It performs exceptionally well in trending markets where impulsive moves clearly define the path of least resistance. While useful on all timeframes, FVGs on H4 or Daily charts often carry more weight and offer stronger support or resistance than those found on one-minute charts. Traders should be cautious during low-volatility periods, as small gaps may lack the institutional significance required to influence future price action.

Strategies using this indicator (66)