ICT Fair Value Gap (FVG) Explained

What is Fair Value Gap in ICT?

A three-candle price inefficiency where the first and third candles do not overlap across a price interval, often created by displacement.

Definition of Fair Value Gap

Bullish FVG: candle 1 high is below candle 3 low. Bearish FVG: candle 1 low is above candle 3 high.

How to identify Fair Value Gap

Use three consecutive candles. For bullish FVG, mark C1 high to C3 low; for bearish FVG, mark C3 high to C1 low. The middle candle often shows displacement.

Bullish Fair Value Gap example

a strong up move leaves a gap between candle 1 high and candle 3 low; price later retraces into it and reacts upward.

Bearish Fair Value Gap example

a strong down move leaves the inverse gap; retracement may react lower.

Fair Value Gap chart examples

Practical trading example

After a sell-side sweep, an impulsive rally creates a bullish FVG; wait for price to retrace into the gap and seek confirmation toward BSL.

Common mistakes and important notes

An FVG is not proof of institutional orders or a guaranteed fill/reversal. Some gaps are fully traversed; timeframe and context matter.

Related ICT concepts

Part of Imbalances and Price Gaps. New to ICT? Start with the beginner guide.