FairValueGaps.comCheat sheet
Guide

Fair value gap guide

This guide is about the chart pattern traders call a fair value gap, not the company valuation term. It covers the rule, why a gap forms, what filling means and where educators disagree.

What it is

A fair value gap (often shortened to FVG) is a three-candle pattern. The wicks of the first and third candles do not overlap. The middle candle moved through that price range quickly, so little trading happened inside it.

The range between the two wicks is the gap. Traders draw it as a box and watch what price does when it comes back.

Searching for "fair value gap" also finds articles about valuing a company. This site is only about the chart pattern.

The rule, step by step

Schematic of a bullish and a bearish fair value gapTwo three-candle diagrams. On the left, a bullish gap: the high of candle 1 sits below the low of candle 3, with a large up candle between them. On the right, the mirror image for a bearish gap.Bullish fair value gaplow of candle 3high of candle 1gap12 (strong up)3Rule: high of 1 < low of 3Bearish fair value gaplow of candle 1high of candle 3gap12 (strong down)3Rule: low of 1 > high of 3
Diagram, not a market chart. Candle sizes are drawn for clarity. The amber band is the gap: the range between the wicks of candles 1 and 3 that candle 2 crossed.
  1. Take three candles in a row and number them 1, 2 and 3. Candle 1 is the oldest.
  2. Bullish: the low of candle 3 is above the high of candle 1. The gap runs from the high of candle 1 up to the low of candle 3.
  3. Bearish: the high of candle 3 is below the low of candle 1. The gap runs from the high of candle 3 up to the low of candle 1.
  4. The gap exists once candle 3 has closed. Wicks that only touch do not make one. Candle 2 can be any size, but gaps usually sit around a large one.

The two directions have their own pages: bullish fair value gaps and bearish fair value gaps.

Why a gap forms

Why a fair value gap is emptyOn the left, three candles with a large up candle between them leave a gap. On the right, a bar chart of how many trades happened at each price: many outside the gap, very few inside it.1. Price moves fast123the gapOne side dominates and price jumps.2. Few trades happen inside the gapmany trades at the other pricesfew trades hereTrades done at each price (teaching units).The empty stretch is what traders mark.
Diagram, not a market chart. The usual explanation, offered as a way to think about the pattern and not a proven law of markets.

When buyers or sellers dominate for a moment, price moves fast. Orders on the other side are thin, so few trades are done at the prices price passed through. Many traders read the gap as a stretch where the market did not trade both ways.

That is the usual explanation. It is a way to think about the pattern, not a proven law of markets. The "fair value" in the name is a trader's label. It is not a measurement of value.

Gaps that sit in an empty stretch of price are close to what some educators call a liquidity void. That site defines the general term.

A real chart, marked by the rule

EURUSD15 minute2 bullish 4 bearish ยท 6 gaps by the rule
1.119001.120001.1210006:0008:0010:0012:0014:0016:00123456
  1. 1Bearish1.12036 to 1.12084formed 07:30 UTCTraded through at 12:45 UTC
  2. 2Bearish1.12003 to 1.12035formed 07:45 UTCTraded through at 08:15 UTC
  3. 3Bearish1.11939 to 1.11971formed 09:00 UTCTraded through at 09:30 UTC
  4. 4Bullish1.11953 to 1.11975formed 10:00 UTCTraded through at 10:30 UTC
  5. 5Bullish1.11932 to 1.11955formed 12:45 UTCTraded through at 16:15 UTC
  6. 6Bearish1.11964 to 1.11965formed 16:45 UTCTraded through at 16:45 UTC
EURUSD, 23 October 2026, 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, 23 October 2026, 06:00 to 18:00 UTC. The plain rule finds 6 gaps in this window (2 bullish, 4 bearish). By the end of the window price had traded through 6 of them and had not come back to 0.

This day was picked because it reads clearly. The example gallery has more, and says how they were chosen.

Filling a gap

What it means to fill a fair value gapThree panels. First, a bullish gap forms. Second, a later candle re-enters the top part of the gap, a partial fill. Third, a later candle trades through the whole gap to its far edge, a full fill.1. The gap formsZone marked. Price has moved away.2. Partial fillPrice re-enters part of the range.3. Full fillPrice trades through the far edge.used upMitigation is the word many traders use for the return. Many gaps are never revisited at all.
Diagram, not a market chart. A bullish gap is shown; a bearish gap is the same picture upside down. Filling is a description of what price did, not a prediction.

Price filling a gap means it trades back into the range. A partial fill reaches part of the range. A full fill trades through to the far edge. Many traders say a gap is mitigated once price has returned, and treat it as used up.

This site uses two plain words for what price did next in the candles it shows. Touched means a later candle traded back into the gap. Filled means a later candle traded through the far edge. Neither word is a forecast.

Where definitions differ

There is no single agreed definition. Some educators ignore small gaps. Some want candle 2 to be a displacement candle, a large and fast move. Some measure between candle bodies, not wicks. Some call the same pattern an imbalance or an inefficiency.

This site uses three candles, wicks only, no minimum size. A chart can show a gap here and none on a site with a stricter rule. The page on fair value gap versus imbalance compares the words.

Timeframes

The rule works on any timeframe. A gap on a daily chart covers more price than one on a five-minute chart, and many traders give the larger one more weight. The same price can sit inside a gap on one timeframe and be ordinary movement on another, so say which chart a gap was found on.

Common mistakes

Reading gaps by eye is slow. The same rule is built into a tool on the fvg indicator site.

Keep reading

Educational content, not financial advice. A gap is not a signal.