FVG (Fair Value Gap): the ICT/SMC gap explained

An FVG (fair value gap) is a three-candle pattern in which the middle candle moves so fast that an uncovered space is left between the wick of the first candle and the wick of the third. In the ICT/SMC approach (Inner Circle Trader / Smart Money Concepts), it is seen as an area of imbalance that price may return to in order to “fill” the gap.

The name can be misleading: “fair value” has nothing to do with fundamental valuation, and an FVG is not the same as a price gap between the close and the open of a session. Gaps like this appear on charts very often, and many of them get broken through with no reaction, so not every one is a signal. Filtering gaps, for example by size or higher timeframe, requires your own testing.