Fair Value Gap (FVG): A Complete Trading Guide (2026)

What Is a Fair Value Gap (FVG)? 

A fair value gap, often called an FVG in trading, is a small price zone the market skips during a fast move. 

Price moves from one level to another without much trading in between, which leaves an imbalance on the chart.

When this happens, buyers or sellers clearly have control for a moment. That’s why many traders pay attention to fair value gaps in trading, price often comes back to these areas later before continuing in the same direction.

How to Identify a Fair Value Gap (FVG) on a Chart

To spot a fair value gap on a chart, start by looking for a strong price move. This usually appears as a fast push up or down, where the price doesn’t trade smoothly through every level.

A fair value gap forms across three candles. Price moves hard in one direction, and the wicks of the first and third candles don’t touch. The empty space between them is the fair value gap.

Once you see it, mark that zone on your chart. If price comes back into it later and reacts, that’s what many traders watch. Some use indicators to automatically highlight FVGs, but manually spotting them helps you better understand the move.

Things to check before confirming FVG 

• Confusing normal session gaps with fair value gaps. A gap between a market close and open is not the same as an FVG in trading.

• Ignoring candle wicks and focusing only on candle bodies. Fair value gaps are identified wick to wick.

• Looking at FVGs without context. They tend to work better when aligned with the broader trend or higher timeframe.

Bullish FVG vs Bearish FVG

Fair value gaps can be bullish or bearish. The idea is always the same. What changes is whether the price moved up or down when the gap formed.

How to identify Bullish Fair Value Gaps

A bullish fair value gap forms after a strong move up. Price moves higher so quickly that it leaves a small gap below. This is an area traders often watch if price comes back before continuing higher.

You’ll usually spot a bullish fair value gap around a strong green candle that stands out from the candles next to it. The key detail is that price jumps higher without trading cleanly through the area below, leaving a small zone that gets skipped during the move.

In both cases, the gap simply marks a spot where price moved too fast. Price doesn’t have to return, but when it does, these zones usually matter.

How to identify Bearish Fair Value Gaps

A bearish fair value gap shows up after a sharp drop in price. The market moves down so fast that it doesn’t trade cleanly through a small area above, leaving a zone where almost no transactions happened. That skipped area is the bearish fair value gap.

You’ll usually spot it around a strong red candle that clearly stands out from the candles next to it. Price pushes down aggressively, and if you look closely, the wick of the candle before the drop doesn’t overlap with the wick of the candle that comes after. That’s the clue. The price didn’t slow down there. It just jumped from one level to another.

Once you see it, mark the zone between those two candles and extend it to the right. That’s the area traders keep an eye on. If price later pulls back into that zone, it often hesitates, slows down, or reacts before deciding whether to continue lower.

If price pushes straight through the area and trades above it, then the idea is done. The gap has been fully dealt with, and there’s no reason to treat it as a valid bearish fair value gap anymore.

The point isn’t to predict what price has to do. The gap simply highlights where the market moved too fast, so if price comes back, that area is worth paying attention to.

Difference between Fair Value Gaps vs. Inverse Fair Value Gaps 

A regular fair value gap is an area price may come back to after a fast move. Price moves too quickly, skips a zone, and that gap stays on the chart. Traders watch it in case price retraces and reacts there.

An inverse fair value gap is a bit different. It usually appears after price has already traded back through a gap and then pushes away again. Instead of acting like a magnet, that area can start behaving more like a level price reacts from.

Some traders also look at related price concepts, such as order blocks, to understand how price reacts after strong moves. Another concept that sometimes comes up in this context is mitigation blocks, which describe how price revisits certain levels after a strong move.

The main difference is how price treats the zone. A normal FVG is something the price hasn’t dealt with yet. An inverse FVG is a gap that’s already been touched or filled and then flipped in behavior.

Not every trader uses inverse fair value gaps, and that’s fine. For beginners, it’s enough to understand that once a gap has been filled, it doesn’t always stop mattering. Sometimes it just changes how price reacts around it.

Basic FVG Trading Strategy: Entry, Exit & Stop-Loss Rules 

A basic fair value gap trading strategy is simple. You wait for price to move fast, mark the gap it leaves behind, and then pay attention to what happens if price comes back into that area.

In a bullish FVG, price pushes up hard and leaves a gap below. The entry comes when price pulls back into the fair value gap and starts to hold it. If price slows down, hesitates, or shows a clear reaction inside the gap, that area becomes the long entry zone, rather than chasing the move higher.

In a bearish FVG, price drops quickly and leaves a gap above. The entry comes when price retraces back into the fair value gap and begins to reject it. If price struggles to move higher or starts to stall inside the gap, that area becomes the short entry zone, instead of selling into the initial drop.

There’s no need to be aggressive. Some traders wait for price to tap the entire gap, while others are comfortable entering closer to the middle of the zone. The key idea is the same: let price come to the gap, not the other way around.

Stop-loss is usually placed just outside the fair value gap. For long trades, that means below the gap. For short trades, above it. If price fully moves through the gap, the setup is no longer valid.

Take-profit is often set around nearby price levels, such as a recent high or low. Some traders also take partial profits and let the rest of the position run if price continues moving in their favor.

This is a basic approach. It doesn’t rely on indicators or complicated rules, just price movement and how the market behaves around a fair value gap.

Which Timeframes are Best for Fair Value Gaps (FVGs)? 

Fair value gaps appear at any time frame. What changes is how fast price reacts to them and how much patience you need. A gap on a 5-minute chart behaves very differently from one on a daily chart.

There’s no “best” timeframe for FVG trading. It really depends on how you trade and how long you’re comfortable holding a position. Let’s break down the timeframes into short, medium, and long term.

Short-Term Timeframes (Intraday Trading)

On lower timeframes, fair value gaps form and fill quickly. These are the ones day traders and scalpers usually watch. Price moves fast, reactions are sharp, and decisions need to be quick.

The downside is noise. Not every gap matters, and price can move through them without much respect. That’s why many traders are more selective with intraday FVGs.

Medium-Term Timeframes (Swing Trading)

On 1-hour or 4-hour charts, fair value gaps tend to be clearer. Price has more structure, and reactions are easier to read. For many traders, this is where FVGs feel the most reliable.

These gaps don’t fill instantly. They often stay relevant for days, sometimes longer, which gives more time to plan entries and manage risk.

Long-Term Timeframes (Position Trading)

On daily or weekly charts, fair value gaps usually come from major moves. These gaps can act as important areas for weeks or even months.

They don’t get tested often, but when they do, price reactions can be meaningful. Long-term traders often use these gaps as reference zones rather than exact entry points.

Basic FVG Indicators & Detection Tools 

Fair value gaps can be spotted just by looking at the chart. You don’t need complex tools to find them. Many traders actually prefer marking FVGs manually, especially when they’re still learning how price behaves.

That said, indicators can help speed things up, especially if you’re watching multiple markets or timeframes. The key is using them as a visual aid, not as a signal by themselves.

Manual Chart Analysis

The simplest way to find a fair value gap is to scan the chart for fast price moves. Look for three candles where price moves strongly in one direction and leaves a small area in between that wasn’t traded.

Mark that zone and watch how the price reacts if it comes back later. Doing this by hand helps you understand when a gap matters and when it doesn’t.

Indicators for MetaTrader 4/5

On MT4 and MT5, there are custom indicators that automatically highlight fair value gaps on the chart. These tools draw boxes over the gap areas so they’re easy to spot.

They’re useful for saving time, but it’s still important to understand why the gap is there instead of relying only on the indicator.

Indicators for TradingView

TradingView also offers fair value gap indicators, many of them created by the trading community. These usually mark bullish and bearish FVGs in different colors across any timeframe.

As with any tool, they work best when combined with simple price analysis, not used on their own.
 

Conclusion 

Fair value gaps are a simple way to read what price is doing when the market moves fast. They highlight areas where price didn’t trade cleanly and may react if it comes back.

They’re not a signal on their own and they don’t work every time. But when used with patience and basic risk control, fair value gaps can help traders stay focused on price instead of overcomplicating their analysis.