Fair Value Gap (FVG)
Fair Value Gap (FVG)
אנליזה טכניתDefinition
An area on the chart where the price moved so quickly that a gap remained. In a three-candle bullish pattern, when the low of the third candle is higher than the high of the first candle, the range between them is the FVG (and vice versa in a downtrend). ICT and Smart Money traders expect the price to return to the area before continuing.
Detailed explanation
The idea: such a sharp move leaves unfilled orders, and the price returns to the area to fill them. In practice, not every gap is filled, and some are only filled after your drawdown has already been hit. Like any technical tool, FVG is only valuable within context: trend direction, timeframe, and surrounding levels. And in a prop account, the drawdown behind the gap is set before entry, because a price that passes the entire gap invalidates the idea.
An example from the prop world
With a sharp rise in NQ, the high of the first candle is 20,100 and the low of the third candle is 20,130. The range between 20,100 and 20,130 is the FVG. A trader waits for a return to the area, enters long within it, and places the stop below 20,100.