What Is a Fair Value Gap (FVG)?

A Fair Value Gap (FVG), sometimes called an imbalance, is a three-candle pattern where price moves so aggressively in one direction that it leaves a gap no trading occurred in. Specifically, it is the space between the wick of the first candle and the wick of the third candle, left open by a large second candle. Traders call that gap an inefficiency — a stretch of price the market moved through too quickly for much two-sided trading.

What mitigation means

See it on a real chart: EURUSD liquidation heatmap — the modeled clusters above and below the current price.

When price later trades back into a marked gap, traders call that mitigation. The candle pattern cannot show whether unfilled institutional orders remain there, and it does not guarantee that price will return or continue afterward.

How to spot an FVG

• Find a strong, large-bodied candle (the impulse).
• Look at the candle before it and the candle after it.
• If the first candle's high and the third candle's low do not overlap (in an up-move), the space between them is a bullish FVG. The inverse is a bearish FVG.
• Record gap size and volume if you backtest the pattern; do not assume either makes the level predictive.

How traders test the pattern

A common hypothesis is to watch an unfilled FVG in the direction of a higher-timeframe trend, then require separate confirmation before acting. Combining it with a liquidation cluster adds context, but Ampeld's historical test found FVGs were not reached more often than distance-matched control levels.

Ampeld highlights FVGs automatically alongside its modeled stop-loss clusters, so you can see both on the same chart. Open the web terminal to try it free.