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Glossary

First and third candle

The first and third candles of a fair value gap are the two candles whose ranges fail to overlap, with the middle candle between them.

By Michael H.. Last updated . Corrections log

Definition

The first and third candles of a fair value gap are the two candles whose ranges fail to overlap, with the middle candle between them.

In a bullish gap the gap runs from the high of the first candle up to the low of the third. In a bearish gap it runs from the low of the first candle down to the high of the third.

These two candles set the gap edges. Their colour does not matter to the rule, only their highs and lows.

On a real chart

EURUSD15 minute3 bullish 3 bearish ยท 6 gaps by the rule
1.118001.119001.1200006:0008:0010:0012:0014:0016:00123456
  1. 1Bullish1.11769 to 1.11780formed 07:15 UTCTraded through at 09:30 UTC
  2. 2Bullish1.11838 to 1.11889formed 07:45 UTCTraded through at 08:30 UTC
  3. 3Bearish1.11888 to 1.11889formed 08:15 UTCTraded through at 08:15 UTC
  4. 4Bearish1.11846 to 1.11853formed 09:00 UTCTraded through at 10:30 UTC
  5. 5Bullish1.11802 to 1.11808formed 10:30 UTCNot revisited by 18:00 UTC
  6. 6Bearish1.11908 to 1.11918formed 17:00 UTCTraded through at 17:15 UTC
EURUSD, 2026-10-13, 06:00 to 18:00 UTC. Real candles: Dukascopy 15-minute candles, read 2026-10-31. Fair value gap by the three-candle wick rule, no minimum size. Each box runs from its gap until a later candle trades through its far edge, or to the end of the chart.

EURUSD, 13 October 2026, 15 minute candles, 06:00 to 18:00 UTC. The rule finds 6 gaps in this window. A bullish gap whose third candle opens at 07:00 UTC runs from 1.11769 to 1.11780, a size of 0.00011 in price. A candle opening at 09:30 UTC traded through its far edge, so it is filled.

The window was chosen because it shows the term clearly. It is one chart, and it says nothing about what the next gap will do.

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