Fair Value Gaps (FVG) — Why Price Always Returns

Fair Value Gaps (FVGs) represent inefficiencies in the market created when institutional orders drive price aggressively in one direction. These imbalances leave behind zones where either buyers or sellers are missing, causing a gap in price that often acts like a magnet for future price movement.

When such imbalances occur, the market tends to return to these areas to rebalance order flow before continuing in the direction of the main trend. FVGs are therefore powerful clues that reveal the presence of institutional activity and can serve as precise trading zones for smart money traders.

Identifying high-quality FVGs involves focusing on gaps that align with overall market structure — particularly those near Breaks of Structure (BOS) or within premium/discount zones. When combined with order blocks, FVGs highlight areas where institutions are likely to have entered or exited positions.

Smart traders use these zones for refined entries. When price retraces to fill an FVG that aligns with their directional bias, it offers low-risk, high-reward setups. In many strategies, FVGs and order blocks form the backbone of modern institutional trading systems.

In essence, Fair Value Gaps expose the footprints of smart money. Understanding their logic helps traders anticipate continuation moves with greater accuracy, precision, and confidence.