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. That gap represents an inefficiency — a zone where the market moved too fast to fill orders on both sides.

Why price returns to fill FVGs

Markets tend toward efficiency. When an impulsive move leaves an imbalance, there are unfilled orders and trapped participants in that zone. Price frequently retraces back into the FVG to 'rebalance' — letting market makers fill the orders that were skipped — before continuing. This return is called mitigation.

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.
• Larger gaps left by higher-volume impulses are stronger and more likely to be respected.

How to trade the mitigation

The classic setup: wait for price to pull back into an unfilled FVG that sits in the direction of the higher-timeframe trend, then look for a reaction (rejection wick, CVD shift) and enter toward the trend. FVGs are most powerful when they line up with a liquidation cluster — the gap gives you the entry zone, and the cluster tells you where the liquidity that fuels the move is sitting.

Ampeld highlights FVGs automatically alongside stop-loss clusters and gravity lines, so you can see imbalance and liquidity on the same chart. Open the web terminal to try it free.