What Is a Fair Value Gap (FVG)?
How to Mark It and Find Entries

What is a fair value gap (FVG)?

A fair value gap (FVG) is support or resistance that comes from a price gap between candle 1 and candle 3. The gap is seen as an “imbalanced” price area where buying or selling is still left over, so price is likely to come back and “fill” the gap later.

We take advantage of price coming back to fill that imbalanced gap by looking for entries and setting the SL, just as with demand / supply zones and order blocks. They all act as support and resistance, they just look different.

Types of FVG: bullish FVG and bearish FVG

TYPE 1 · BULLISH

Bullish FVG = support

Candle 1 wick↔Gap = FVG↔Candle 3 wickBig candle 2 ↑

1

Find a long green candle – price rises sharply and prints a big candle

2

Mark the zone – the gap between the wicks of candles 1 and 3 = the bullish FVG zone

3

BUY on the test – when price comes back down to test the zone, leftover buying is likely to push it up

TYPE 2 · BEARISH

Bearish FVG = resistance

Candle 1 wick↔Gap = FVG↔Candle 3 wickBig candle 2 ↓

1

Find a long red candle – price falls sharply and prints a big candle

2

Mark the zone – the gap between the wicks of candles 1 and 3 = the bearish FVG zone

3

SELL on the test – when price comes back up to test the zone, leftover selling is likely to push it down

Finding entries with a bullish FVG on a gold chart

1) Mark the bullish FVG and BUY with the trend

On this H1 gold (XAUUSD) chart the current trend is up, and price rises sharply to print a big green candle. When you see a long green candle like this, mark the gap between the wicks of candles 1 and 3 to get a bullish FVG zone (the blue box in the image).

If price later comes down to test the FVG zone, whether at the top edge, the middle or the bottom edge of the zone, leftover buying is likely to push it up, so you can BUY with the trend straight away and set your SL below that FVG zone (always place the SL below whichever FVG zone you entered from).

2) A new FVG zone forms → add a BUY

Leftover buying in the first FVG zone pushes price up, and it also creates a new FVG zone because it prints another long green candle you can mark. In this case, if price comes back down to the new FVG zone, you can add another BUY with the trend, but you must set the SL below the new zone.

3) It stays support until price closes below the bottom

In the end price rises with the trend, and as long as price has not closed below the bottom of the FVG or broken below it, this FVG zone can keep acting as support.

Finding entries with a bearish FVG on a gold chart

The current H1 trend is sideways, but it sits inside an H4 downtrend, and you can draw a main trendline along that downtrend (the black line at the top). So you can look for SELL setups with the H4 trend. Price then prints a big red candle, which gives a bearish FVG zone (the red box in the image).

If price later rises to test this FVG zone, leftover selling is likely to push it down, so you can SELL straight away and set your SL above that FVG zone.

An indicator that marks FVGs automatically on TradingView

You can mark FVGs by hand because the idea is simple, but scanning the chart takes time and strains your eyes. That is why we use an indicator that marks FVG zones automatically. It is free, with no cost at all.

How to add the indicator

Search for FVG (Nephew_Sam_)

1

Open TradingView – log in and open a chart

2

Click “Indicators” – then type “FVG” in the search box

3

Choose FVG (Nephew_Sam_) – the indicator marks FVG zones on the chart automatically

Summary: trading the fair value gap (FVG)

The key to trading the fair value gap: read the trend first, then use FVGs on the same side as the trend (bullish FVGs in an uptrend · bearish FVGs in a downtrend). Enter when price comes back to test the zone, always place your SL outside the zone you entered from, and delete the zone once price closes through its edge.

FAQ about the fair value gap (FVG)