Price action guide
Fair Value Gaps in Crypto, Explained
A fair value gap (FVG) is a three-candle price imbalance created when rapid displacement leaves little overlapping trade between the first and third candles. Traders monitor the zone as an area where price may later rebalance.
How an FVG forms
During a strong move, price can travel so quickly that one side of the auction receives little two-way trade. In a bullish gap, the first candle’s high and third candle’s low do not overlap; the inverse describes a bearish gap. The space between them becomes the zone of interest.
What a return to the zone means
A revisit does not guarantee reversal. Price may reject the edge, trade through part of the zone, fully rebalance it or invalidate the structure. Age, timeframe, the strength of the original displacement and current order flow all change the interpretation.
Use evidence inside the gap
Rather than treating every rectangle as support or resistance, traders can examine how price and flow behave during the retest.
- Does price slow or reject at the boundary?
- Is aggressive flow being absorbed?
- Does spot activity confirm the response?
- Is the higher-timeframe structure still intact?