What a Fair Value Gap actually is
A Fair Value Gap (FVG) is a 3-candle pattern where the wick of candle 1 does not overlap the wick of candle 3, leaving a gap on candle 2. It represents an imbalance — the market moved so fast it skipped fair price discovery. Algorithms tend to return to fill these gaps.
How to spot an FVG
- Bullish FVG: candle 1 high < candle 3 low.
- Bearish FVG: candle 1 low > candle 3 high.
- The gap is the area between candle 1''s wick and candle 3''s wick.
Not every FVG is tradable
The best FVGs share three traits:
- Formed by displacement — large body candle, not a tiny range.
- Aligned with HTF bias — short bearish FVGs in a bearish market.
- Located at premium or discount — bearish FVGs sit in premium, bullish in discount.
A bullish FVG inside an overall bearish market is just noise.
Entry rules
- Wait for price to return to the FVG.
- On the LTF (5M for a 15M FVG), look for CHoCH inside the gap.
- Enter at the 50% level of the FVG (the consequent encroachment).
- Stop beyond the candle 1 wick (bullish) or candle 3 wick (bearish).
Targets
- First target: nearest liquidity pool.
- Second target: opposing FVG or order block.
- Trail stop to breakeven after 1R.
FVG mistakes to avoid
- Trading FVGs against HTF bias.
- Treating every gap as tradable (most aren''t).
- Entering without LTF confirmation.
- Stops too tight, ignoring the wick extreme.
Gold-specific FVG behavior
Gold leaves clean FVGs around NFP, FOMC, and London open. The 15M FVGs formed in the first hour of London have a high mitigation rate within 24 hours.
Where Jenvu fits
Jenvu''s Signal Engine auto-marks bullish and bearish FVGs on multi-TF charts and scores them by displacement strength.
FAQ
Do FVGs always fill? No. About 70% mitigate within 2 sessions on gold.
What timeframe for FVG trading? 15M FVGs for intraday; 4H FVGs for swings.
Bullish FVG vs bearish FVG? Direction determined by displacement candle.