Smart Money Concepts

Fair Value Gap (FVG)

Definition

An imbalance in price action created by a three-candle formation where the middle candle's body creates a gap between the wicks of the first and third candles. Represents an area of inefficiency that price tends to return to fill.

Example

A bullish FVG formed between 1.0780 and 1.0810 after a strong impulse move. Price retraced to fill the gap before continuing higher.

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