Smart Money Concepts

Fair Value Gap (FVG): the imbalance explained

5 min read · by Jérôme Le Menn

The Fair Value Gap (FVG), or imbalance, is a zone price crossed too quickly, leaving a “void” between three candles. SMC assumes the market tends to come back and fill this imbalance.

How to spot an FVG

Take three consecutive candles. A bullish FVG appears when the low of the 3rd candle stays above the high of the 1st: a non-overlapping gap remains. The bearish FVG is the opposite.

This gap materializes an imbalance between buyers and sellers — a move so fast it wasn't “balanced”.

Common uses

As a target: price could come back to fill the FVG. As an entry zone: you wait for the return into the FVG to enter in the direction of the dominant move.

An FVG combined with an order block and a liquidity grab forms a confluence prized by SMC traders.

Limits

Not all FVGs get filled, and many are only partially filled. Without a clear rule (which FVG, which timeframe, which confirmation), the concept is untestable.

Formalize your rules, then backtest: it's the only way to know whether your FVGs have an edge.

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Frequently asked questions

Are all FVGs filled?

No. Many are, but not all, and not always fully. That's why a tested rule and risk management are essential.

Are FVG and imbalance the same thing?

Yes, they're two names for the same phenomenon: a price imbalance left by a fast move over three candles.