A Fair Value Gap (FVG) is a 3-bar pattern where the second bar's range leaves a gap between the first bar's wick and the third bar's wick - meaning price moved through a level without trading there. ICT / Smart Money Concepts strategies use FVGs as future targets that price often revisits.
Shape
{ "type": "fvg" }Usage
- Trade in the direction of the gap when it forms - momentum is in that direction.
- Wait for price to return to the gap as a pullback entry - see fvg_pullback.
Pitfalls
FVGs form constantly on lower timeframes. Without an additional filter (structure level, trend, time-of-day) the signal is noisy.