FVG?

The Fair Value Gap (FVG) is a powerful tool used by traders to identify market imbalances and inefficiencies.

Here are the key points about FVGs:

Definition: FVGs occur when buying or selling pressure leads to significant price movements, leaving behind gaps on price charts. These gaps represent areas where the market has deviated from its fair value.

Formation: On a price chart, an FVG appears as a three-candlestick pattern. In a bullish scenario:

The top wick of the first candlestick does not connect with the bottom wick of the third candlestick.

The gap created by the wicks of the first and third candlesticks is the Fair Value Gap.

Similarly, in a bearish scenario, the bottom wick of the first candlestick does not connect with the top wick of the third candlestick.

Natural Correction: The FVG concept is based on the belief that the market tends to correct itself. These price disparities are not sustainable long-term, and the market tends to gravitate back towards fair value before continuing in the same direction as the initial move.

Identification: Traders spot FVGs by analyzing significant candlestick patterns on crypto trading charts. These gaps should not have overlapping candles.

Remember, FVGs provide valuable insights for traders seeking trading opportunities and understanding market dynamics. 📈🔍

Not financial advice do your own research 🔬