What is the FVG (Fair Value Gap)?
The FVG is an unfair price area that occurs when the market moves very quickly, causing candles to jump without touching each other. This gap represents an imbalance between buyers and sellers. In other words:
The price rose or fell so quickly that a candle in the middle did not react, leaving us with a price gap.
📌How is the FVG gap formed?
It consists of 3 consecutive candles:
👉 A bullish gap (Bullish FVG) occurs when:
The low of the first candle (Candle 1 Low)
is higher than the high of the third candle (Candle 3 High)
It means there is a gap that the price hasn't touched.
👉 A bearish gap (Bearish FVG) occurs when:
The high of the first candle (Candle 1 High)
is lower than the low of the third candle (Candle 3 Low)
It means the price dropped quickly and left a gap.
📌 Why is the FVG important? Because:
An area where the price is expected to return to fill it.
An excellent entry area for professionals (Smart Money).
Helps in determining the retracement during the trend.
Can be used to determine the target when filling the gap
📌 How do we use the FVG in trading?
1️⃣ Entry with the trend (best way)
If the trend is upward:
We are looking for a Bullish FVG, we wait for the price to return to the area to enter a buy from the gap limits
If the trend is downward:
We are looking for a Bearish FVG, we wait for the price to return to the gap to enter a sell.
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