🚨🔥[The Fair Value Gap ]🔥🚨
(FVG) was developed by Michael Huddleston,
a trader and analyst from the USA,
also known as The Inner Circle Trader (ICT).
He has a popular YouTube channel where he promotes his Smart Money Concept,
which includes the Fair Value Gap setup. The Fair Value Gap is a pattern made up of three candles:
A Bullish Fair Value Gap forms on a second rising candle between the high of the first candle and the low of the third candle, without any overlap; A Bearish Fair Value Gap forms on a second declining candle between the low of the first candle and the high of the third candle.
Although ICT prefers not to trade cryptocurrencies, his pattern can be applied across various timeframes in forex, stock, and commodity markets. Examples of both bullish and bearish Fair Value Gaps are shown below on a Bitcoin futures chart.
On the left, you see a Bullish Fair Value Gap formed by candles 1–2–3.
The gap (highlighted in yellow) is the area between the high of candle 1 and the low of candle 3.
On the right, you see a Bearish Fair Value Gap formed by candles 4–5–6.
The concept is the same but in reverse.
These examples show how Fair Value Gaps are used in trading to enter positions during pullbacks in the direction of the main trend.
