FVG (fair value gap)

The formula

An imbalance left by three candles where the first and the third do not overlap.

How to read it

An area price often returns to fill. Used as both an entry marker and a target.

The hole is a measurable fact; what is inferred from it is not. The common idea is that price comes back to fill the void, and it often does, but it also does so on areas with no gap at all. A FVG is treated as an area of interest to watch, never as an obligation on the market.

The classic mistake

Counting FVGs after the fact to prove they work. On a past chart you always find the filled gaps and forget the rest. The only honest measure is to mark them in advance, in a journal, and count both populations.