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LEARN · ICT · FAIR VALUE GAP
If you have seen a rectangle labeled FVG on a trading chart, the next question is usually: does price actually come back to it? Before testing that claim, we need a definition that can be measured consistently. This guide treats Fair Value Gap as a price pattern first, not as a buy or sell signal.
What is a Fair Value Gap?
In ICT terminology, a Fair Value Gap is commonly defined with three consecutive completed candles. The important feature is a non-overlapping price area between Candle 1 and Candle 3 after price moves quickly through the middle candle.
Bullish FVG
Candle 1 High < Candle 3 Low
Bearish FVG
Candle 1 Low > Candle 3 High
The key is not simply that the middle candle is large. The structure exists when a price interval between Candle 1 and Candle 3 does not overlap.
VISUAL GUIDE · FVG STRUCTURE
CANDLE 1
Reference price
For a bullish FVG, record the high of Candle 1.
CANDLE 2
Expansion
Price moves quickly through the middle of the three-candle sequence.
CANDLE 3
Confirm non-overlap
If Candle 3 Low is above Candle 1 High, the interval between them is a bullish FVG.
Bullish FVG: C1 High < C3 Low → the non-overlapping interval is the gap.
DATA QUESTION · After an FVG forms, how often does price revisit it within a fixed number of bars?
Bullish vs bearish FVGs
A bullish FVG exists when Candle 3 Low remains above Candle 1 High. A bearish FVG is the mirror condition: Candle 3 High remains below Candle 1 Low.
Why do traders watch FVGs?
ICT and SMC traders often describe an FVG as an imbalance created when price moves quickly through an area. They then watch whether price later revisits that interval. The important distinction is that the pattern definition and the revisit claim are not the same thing.
“Price always comes back to an FVG” is a hypothesis to test, not part of the definition.
Some gaps are revisited quickly, some remain open for a long time, and some may not be revisited within the observation window. Research therefore needs fixed rules for the event and the outcome.
Turn the concept into data
- What percentage of FVGs receive a first touch?
- How many bars does the first revisit take?
- How often does price reach the midpoint or fully fill the gap?
- Do bullish and bearish FVGs behave differently?
- Do Asia, London, and New York sessions differ?
- Do 1m, 5m, and 15m timeframes produce different distributions?
- Does market structure, volatility, or higher-timeframe direction change the result?
Why a few chart examples are not enough
Hand-picked examples can make almost any pattern look cleaner than it is. A reproducible study should report the sample size, date range, market, timeframe, FVG rule, revisit rule, and exclusions before interpreting the result.
NEXT RESEARCH
BTC FVG Backtest
The first Backtest Lab study defines BTC FVGs mechanically and measures revisit rate, time-to-revisit, and timeframe differences.
Operational definition and methodology
“Fair Value Gap” is not a standardized exchange statistic. In this article, it means only the explicit three-candle, wick-to-wick rule defined above. A revisit or fill is a testable outcome—not a guarantee that price must return.
Sources and methodology
- TRADE EVIDENCE Methodology — definitions, assumptions, and reporting rules.
Past data and backtest results do not guarantee future performance. This content is for education and research and is not a recommendation to buy or sell any financial instrument.