FAIR VALUE GAPS AND ENTRY METHODS
In technical analysis, Fair Value Gaps (FVGs) are a concept rooted in price imbalances, where a sudden shift in price leaves a gap between candles—typically due to strong buying or selling momentum. These gaps often act as magnets for price, as the market seeks to rebalance inefficiencies.
Here are the three primary entry methods traders use when interacting with FVGs:
Full Fill
This occurs when the price fully retraces into the fair value gap, completely rebalancing the imbalance. Traders may enter when the gap is fully filled, anticipating a reversal or continuation from that level.
Consequent Encroachment (C.E.)
This method targets the midpoint of the FVG. If price retraces to around 50% of the gap, it can signal a potential entry. This is a balanced level where institutions may engage in reaccumulation or redistribution.
Entry Drill (IOFED)
This is a quick tap into the FVG before continuation in the original direction. It’s a more aggressive entry approach, assuming the market won’t need to fully fill the gap before moving.
These methods are often used within smart money concepts and can offer precise, high-probability trade setups when combined with market structure and liquidity analysis.
