EASILY UNDERSTAND FAIR VALUE GAPE (FVG)
A Fair Value Gap is a price imbalance created when there’s a strong move up or down, and the market skips some price levels — meaning no trade occurred there.
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🔍 How does it happen?
During high momentum (big buyer/seller activity), price moves so fast that it jumps over some levels. This creates a "gap" in the middle candle.
It usually forms in a 3-candle pattern:
Bullish Example (FVG Up)
Candle 1 (Bearish)
Candle 2 (Big Bullish) ← Gaps up quickly
Candle 3 (Small Bullish or Bearish)
FVG: Between high of Candle 1 and low of Candle 3
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✅ Rules to Spot a Fair Value Gap
1. Look for 3 consecutive candles
2. Middle candle has a large body
3. Gap forms between:
Bearish FVG: Low of Candle 1 & High of Candle 3
Bullish FVG: High of Candle 1 & Low of Candle 3
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📈 Why is it important?
Smart Money (banks, institutions) often return to fill these gaps before continuing the trend. So:
It acts as a pullback area
Can give a low-risk entry
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🧠 How to Trade It
1. Identify the FVG zone
2. Wait for price to come back into the zone
3. Enter trade in direction of the move
4. Place stop-loss below/above the FVG zone
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📷 Example Diagram (for Bullish FVG)
Candle 1 ↓ ← (High)
┌──────┐
│ │
└──────┘
Candle 2 ↑↑↑↑↑↑↑↑ ← Large Bullish Candle
┌──────────────┐
│ │
└──────────────┘
Candle 3 ↑ ← (Low)
┌──────┐
│ │
└──────┘
FVG Area → Between High of Candle 1 and Low of Candle 3
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🎯 Tip:
Use FVG with:
Premium/Discount zones
Market structure (Break of Structure - BOS)
Confirmation (like candle reversal)