TradingIntermediate#Technical Analysis#Price Action
FVG (Fair Value Gap)
F
Definition
An imbalance in price move shown by a gap between candles, often filled as price seeks to rebalance liquidity.
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Concept Diagram
Key Takeaways
1
FVGs are 3-candle patterns where a gap forms between the first candle's wick and the third candle's wick.
2
They represent institutional imbalances — areas where price moved too fast for proper fill.
3
Price tends to return to fill FVGs before continuing the trend, making them high-probability trade entries.
4
In crypto's volatile environment, FVGs on 4H and daily timeframes offer the most reliable signals.
Practical Example
Candle 1: $60k close (high $61k). Candle 2: Massive green candle $60k→$66k. Candle 3: $65k close (low $64k). The gap between $61k and $64k is an unfilled FVG — price will likely return to fill it.
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Related Terms
Trading
Liquidity SweepA sharp price movement used to trigger stop losses before reversing, generating the liquidity needed for large institutional positions.
Market Structure
Order Block (OB)The last candle in the opposite direction before a strong directional expansion, marking institutional entry points.
Market Structure
Liquidity VoidA sudden, explosive price movement that leaves no orders filled in its wake, often seen during black swan events or news.
Market Structure
DisplacementA powerful move in price that shows clear institutional intent, leaving multiple Fair Value Gaps behind.
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