Fair value gaps
Imbalance
A fair value gap (FVG) is a three-candle pattern where the wicks of the first and third candles do not overlap. The middle candle moved so fast that one side barely traded. Price often comes back to rebalance part of that gap before continuing.
Remember: Bullish FVG: candle 1 high is below candle 3 low.
Test yourself
Which defines a bullish FVG?
Candle 1's high is below candle 3's lowThe gap between candle 1's high and candle 3's low is the imbalance.
What do traders expect around an FVG?
Price may return to rebalance it before continuingGaps act like magnets, but not always and not completely.
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