Fair Value Gap (FVG)

A fair value gap, or FVG, sometimes called an imbalance, is a three-candle formation in which a strong middle candle moves so fast that the wicks of the candles on either side do not overlap, leaving an untraded price range on the chart. Traders who follow order-flow style price action read that range as an area where activity was one-sided and where the market may return to trade more evenly. An FVG is therefore treated as a potential pullback zone rather than a signal on its own: price re-entering the gap is watched for a reaction, while a clean move straight through suggests the imbalance no longer matters. Many gaps are never revisited, so context and confirmation still apply.