Smart Money

Fair Value Gaps: Unfilled Zones

5 min read•Trading Reference Guide

What is a Fair Value Gap?

Fair Value Gap (FVG) = An unfilled price zone where no trades occurred. Price "gaps" from one level to another without filling the space between.

Step 1: Price ActionClose: 2.40FVGStep 2: Gap UpOpen: 2.45Gap!Step 3: FVG FillsRalliesReturns to fill gapFILL!Key Points✓ FVG = Unfilled price zone✓ No candle filled the gap✓ Price will return to fill✓ Strong support/resistance✓ High probability entry✓ when price near FVGTrading: Price gaps up from 2.40→2.45. Gap zone 2.40-2.45 is FVG. Later when price drops back to 2.42 = SHORT entry (gap fills down)

Why FVG Exists

On 5m or lower timeframes:

1. No candle filled the zone

2. Price jumped from one level to another

3. Zone remains "unfilled"

4. Price tends to return to fill it (fill the gap)

Two Types of FVGs

Bullish FVG: Price gaps UP. Gap zone is above current price. Price will likely return to fill it DOWN. BUT = bullish signal (institutions expect support)

Bearish FVG: Price gaps DOWN. Gap zone is below current price. Price will likely return to fill it UP. BUT = bearish signal (institutions expect resistance)

Trading FVGs

Strategy: Price returns to fill FVG. When approaching FVG zone = good entry point. Gap will be filled, and FVG provides support/resistance.

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