TECHNICAL ANALYSIS

Fair Value Gap (FVG)

SUMMARY DEFINITION

In Smart Money Concepts, a three-candle price imbalance where strong momentum leaves an unfilled pricing void between the wicks of candle 1 and candle 3.

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What is Fair Value Gap (FVG)?

Fair Value Gap (FVG) is an essential concept in currency trading.

In Smart Money Concepts, a three-candle price imbalance where strong momentum leaves an unfilled pricing void between the wicks of candle 1 and candle 3.

Mastering Fair Value Gap (FVG) gives traders an edge in evaluating market conditions and managing risk effectively.

Why It Matters for Forex Traders

Technical concepts like Fair Value Gap (FVG) provide objective price action measurements, momentum signals, or structural levels.

How to Identify and Apply Fair Value Gap (FVG)

  • 1
    Plot Fair Value Gap (FVG) on your charting platform across your preferred trading timeframes.
  • 2
    Look for confluence between Fair Value Gap (FVG) and major market support or resistance zones.
  • 3
    Use Fair Value Gap (FVG) as a secondary confirmation tool rather than a standalone trading trigger.

Practical Forex Example

A trader uses Fair Value Gap (FVG) alongside 1-hour trend direction to filter out low-probability trades.
PRO TRADER TIP

Avoid indicator clutter—combine Fair Value Gap (FVG) with clean market structure rather than stacking multiple similar tools.

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Educational Disclaimer: All definitions and explanations in the MyForexSchool Forex Glossary are for informational and educational purposes only and do not constitute financial advice. Trading foreign exchange involves substantial risk of loss.