ICT / Smart Money Concepts

Fair Value Gap

A three-candle price inefficiency where the middle candle's range leaves an untraded zone between the wicks of its neighbors.
Also known as: FVGFair Value Gap (FVG)ImbalanceInefficiency

A Fair Value Gap (FVG), also called an imbalance or inefficiency, is a three-candle pattern where the middle candle displaces price so aggressively that the wicks of candles one and three do not overlap. The untraded space between those wicks is the "gap." ICT practitioners treat the 50% level of this gap (the Consequent Encroachment) as a high-probability retest zone, because price typically returns to rebalance inefficient moves before continuing in the original direction.

FVGs are directional: bullish FVGs form below price after an aggressive rally, bearish FVGs form above price after an aggressive decline. The setup is invalidated when price closes fully through the gap in the opposite direction. Time-of-day also matters. FVGs formed during kill zones (NY open, London open) are considered higher-quality than those formed in illiquid sessions.

Strategies using Fair Value Gap

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ICT Silver Bullet
ICT Advanced Models
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ICT Unicorn Model
ICT Advanced Models
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Power of 3 (PO3)
ICT Advanced Models

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Consequent Encroachment
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