Fair value gap in gold trading
A fair value gap is a three-candle pattern where the first and third candles' wicks do not overlap, leaving a price gap that gold often returns to fill.
Also called FVG, Imbalance, Price inefficiency
A fair value gap (FVG) forms when a strong candle leaves a space between the wick of the candle before it and the wick of the candle after it. In a bullish FVG, the high of candle one is below the low of candle three; the gap between them is the FVG. The ICT reading is that price moved so fast that only one side traded, leaving an inefficiency that the market tends to revisit, partly or fully, before continuing.
How it applies to gold trading
Gold creates FVGs constantly because its impulsive moves are large. A 15-minute bullish FVG at 4,004–4,009 left behind by a London-open rally becomes a zone to look for longs on the pullback, with the stop below the gap or below the order block that preceded it. Many traders enter at the midpoint of the gap (the “consequent encroachment”) or wait for a lower-timeframe reaction inside it. A gap that price trades straight through without reacting is treated as a sign the move has weakened.
FVGs are strongest when created by displacement, when they sit in a discount (for longs) or premium (for shorts), and when they align with the higher-timeframe direction.
A common mistake
Expecting every FVG to fill. In strong gold trends, gaps are left open for days; the ones that get filled quickly are usually on the lower timeframes inside a pullback.
See also: Imbalance, Order block, Displacement, Premium and discount.
Frequently asked questions
How do I identify a fair value gap on gold?
Find a large candle and check whether the wick of the candle before it overlaps the wick of the candle after it. If there is a gap between those two wicks, that gap is the FVG.
Do fair value gaps always get filled?
No. Many are filled partially or not at all, especially in strong trends. Treat the gap as a zone of interest rather than a certainty.