What does Fair Value Gap (FVG) mean?
A Fair Value Gap, or FVG, is a market-structure term used for a fast directional movement where adjacent candles show relatively little overlap. Traders often mark the area as a reference if price later revisits it.
Why it matters
- The area highlights a portion of the chart where price moved rapidly.
- It can help organize pullback or continuation context.
- Its significance depends heavily on the surrounding trend and market structure.
How it works
- 01
A directional impulse creates a visible imbalance across a small candle sequence.
- 02
The area is marked as a zone rather than a guaranteed future target.
- 03
If price revisits the zone, traders observe whether the original structure remains valid.
Example
After a strong upside impulse breaks a range, an imbalance remains below current price. A later pullback into that area may be studied together with the original breakout structure.
Common misunderstandings
- Not every FVG must be filled.
- An FVG is not automatically an entry signal.
- Small imbalances appear frequently and are not all equally meaningful.
Educational reference
This glossary explains terminology and
general market concepts. It is not a
trading signal or a guarantee of future
results.