# Fair Value Gaps

Fair Value Gaps (FVG) are market imbalances identified within a sequence of three candles.

<figure><img src="/files/5YoVx4iKumiI5ycUCoZe" alt=""><figcaption></figcaption></figure>

These gaps occur when the wicks of the outer candles do not overlap the body of the central candle, creating a range between the wicks that marks the Fair Value Gap.

A bullish Fair Value Gap forms when the current low is higher than the high two bars prior.

Conversely, a bearish Fair Value Gap occurs when the current high is lower than the low two bars prior.


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