✨️🤫🤫 The Hidden Power of Fair Value Gaps: How Smart Traders Predict Price Moves
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Fair Value Gaps (FVGs) are among the most overlooked yet powerful tools leveraged by professional and institutional traders. These gaps represent price inefficiencies that occur when a sudden imbalance between buy and sell orders causes a sharp move creating a void on the chart, typically between one candle’s high and the next candle’s low.
These gaps often act like magnets price tends to revisit them. When it does, it presents a high probability entry opportunity for savvy traders.
What Is a Fair Value Gap
A Fair Value Gap forms when price moves so aggressively that it doesn’t allow orders to fill evenly on both sides. It’s a sign of urgency in the market an imbalance. Typically, an FVG appears between:
The low of Candle 1
The high of Candle 3
(With Candle 2 being the impulsive push)
In bullish FVGs, price surges upward, leaving a gap below. In bearish FVGs, price plummets, leaving a gap above.
Why Should You Care?
Because Smart Money institutions, hedge funds, algorithms often revisit these gaps to enter or reload positions. This means:
You can anticipate high probability entries
You can set clean stop losses and targets
You can reduce emotional and impulsive trades
How to Trade Using FVG
Step 1: Identify the FVG
Spot a strong impulse candle (Candle 2) with minimal or no wick, nestled between two smaller candles.
Step 2: Wait for Price to Return
Let price return into the FVG zone. Patience is crucial never chase price.
Step 3: Look for Confirmation
Watch for candlestick confirmations within the gap such as a hammer, engulfing pattern, or a strong reversal signal.
Step 4: Define Entry and Exit
Entry: Mid point of the FVG zone
Stop Loss: Just beyond the opposite edge of the gap
Take Profit: At the next significant liquidity zone or Order Block
⚡️$DOGE
