ICT & SMC 7 min read•Difficulty: Beginner

Deciphering Fair Value Gaps (FVG) and Market Imbalance

A 3-candle price model that reveals buying or selling imbalance across institutional algorithmic delivery.

A Fair Value Gap occurs within a 3-candle sequence when there is an imbalance between buyers and sellers, leaving an unfilled space between Candle 1's high and Candle 3's low (in a bullish run).

Algorithms often return to rebalance this inefficiency before continuing the predominant move.

Traders use FVGs as potential discount re-entry zones when aligned with overall directional bias.

Key Execution & Conceptual Rules

FVG represents institutional inefficiency.

Wait for confirmation candle closes rather than blindly setting limit orders inside the gap.

Gaps in higher timeframes (Daily / 4-Hour) exert stronger magnet pull than minute charts.