Market Rebalancing: Understanding the Fair Value Gap (FVG)
In the sophisticated world of institutional price action, the most significant moves often leave behind "footprints" that the average retail trader overlooks. At PFH Markets , we believe that mastering market structure requires looking beyond simple support and resistance. One of the most powerful concepts used by professional liquidity providers is the Fair Value Gap (FVG) a phenomenon that signals a market imbalance and high-probability reversal zones. What is a Fair Value Gap? A Fair Value Gap occurs when a market moves so aggressively in one direction that it creates a literal "gap" in price delivery. This usually happens during high-impact news events or institutional shifts in capital. On a candlestick chart, an FVG is identified using a three-candle sequence: Candle 1: The starting point of the move. Candle 2: A large, impulsive "expansion" candle. Candle 3: The candle following the move. The "gap" exists between the wick of Candle 1 ...