The Imbalance Price Often Comes Back to Fill
A three-candle imbalance price often comes back to revisit.
Before you start: No prior concept needed — just comfortable reading a candlestick chart.
Part of the My Edge Official framework — refined through thousands of hours of chart study.
A Fair Value Gap is an imbalance created by aggressive price delivery — and a zone price often revisits at least once. But the FVG has no value on its own; its significance depends entirely on the context in which it formed.
The pattern itself takes three candles: the wick of the first candle and the wick of the third do not overlap, leaving a gap the middle candle moved through. The zone runs between those two wicks, and its 50% level is the consequent encroachment (CE).
- Core Idea
- Why It Exists
- How Professionals Read It
- Practical Application
Imagine the market has a predetermined program that guides price along an exact path.
When this program moves price very quickly in one direction, it sometimes doesn't "fill in" every step along the way — it leaves an empty space across three candles where price never actually traded. We call this empty space a Fair Value Gap (FVG).
Because it's a kind of gap in price, price almost always comes back at least once to "fill" it before continuing on — though that doesn't mean it has to stop there forever. The same gap can play a different role at different points in the day (a target, support, resistance).
The gap on its own isn't a signal — it only becomes meaningful once you look at when and where it formed: on which timeframe, in which session, after what kind of move.
Advanced explanation⌄
Core Idea
Every FVG must be assessed by: time of formation, session, timeframe, context of formation, and current role.
Timeframe: 1-minute, 5-minute, 15-minute, 1-hour, 4-hour.
Session: Asia, London, New York, RTH.
Context of formation: which liquidity was taken? Did price deliver into external or internal liquidity? Was a market structure shift (MSS) present? Was displacement present?
Why It Exists
An FVG's role changes as market context evolves. Depending on price delivery, an FVG can become: a draw on liquidity, an entry reference, an inversion fair value gap, support, resistance, or a target. The same FVG can play several different roles over the course of a trading session.
How Professionals Read It
Higher priority if the FVG: formed during a major session, formed after a liquidity sweep, formed after displacement, sits near significant liquidity, sits near an NDOG or NWOG, or exists on the 1H or 4H timeframe.
The Asia 5-minute and 15-minute FVGs can become a draw on liquidity or an inversion FVG. The first 1-minute FVG after 9:30 and the first after 10:30 carry very high priority.
Practical Application
⚠️ Never assess an FVG in isolation — always assess higher-timeframe context, liquidity, context of formation, current role, session, and time.
How to Use It
In practice:
- As soon as you mark an FVG, classify it immediately along all three axes (timeframe, session, context of formation) — not just "this is a bullish FVG," but "5m FVG, formed in the London Kill Zone, after taking the Asia high."
- Track how the FVG's role changes throughout the day — an FVG that was a target (draw on liquidity) in the morning may become support in the afternoon. Don't lock in on the first role you identify.
- Pay special attention to the first 1-minute FVG after 9:30 and after 10:30 New York time — based on our observations they systematically carry higher priority than other intraday FVGs (see also Monday 1st 09:30 FVG for an extended, weekly version of this concept).
Don't stop here — see how this fits with the rest of the framework.
Continue to Inversion Fair Value Gap (IFVG) →Frequently Asked Questions
How does a Fair Value Gap (FVG) actually form?⌄
A Fair Value Gap is a three-candle imbalance created by aggressive price delivery: the wicks of the first and third candle do not overlap. Price often revisits it at least once — though its significance depends entirely on the context in which it formed.
How do I classify and use an FVG once I've marked it?⌄
Classify it along three axes immediately — timeframe, session, and context of formation (which liquidity was taken, whether an MSS or displacement was present) — since its role can shift during the day between draw on liquidity, entry reference, support, resistance, or target.
FVG vs Inversion Fair Value Gap — what's the difference?⌄
A standard FVG is an untested imbalance still expected to hold its original directional bias; once price trades through it and closes beyond it, invalidating that bias, it's tracked instead as an Inversion Fair Value Gap (IFVG) with the opposite role.
Why does the first 1-minute FVG after 9:30 matter more than others?⌄
The first 1-minute FVG after the 9:30 New York open, and again after 10:30, carry very high priority in this framework because they represent the first institutional imbalance following increased participation.