FVG - Fair Value Gap

A Fair Value Gap (FVG) is a three-candlestick pattern that represents an imbalance in the market caused by aggressive buying or selling.

In a set of three candles, if the middle candle moves far enough, the third candle's low can end up above the first candle's high. The space between those two levels — candle 1's high and candle 3's low — is price that never got traded. That untouched space is the fair value gap (FVG).

Bearish version is the same thing upside down: candle 3's high sits below candle 1's low, and the space between them is the gap.

Because markets often seek to rebalance these inefficiencies, price frequently retraces to the Fair Value Gap before continuing in its original direction.

BISI — Buy Side Imbalance, Sell Side Inefficiency. Forms during bullish movement. The buy side was offered, and the sell side was left inefficient. This is a bullish fair value gap: the third candle's low sits above the first candle's high, and the range between them is what got skipped.

SIBI — Sell Side Imbalance, Buy Side Inefficiency. Forms during bearish movement. The sell side was offered, and the buy side was left inefficient. This is a bearish fair value gap: the third candle's high sits below the first candle's low.

1. IOFED

2. Consequent Encroachment (50%)

3. FVG fill

• IOFED - Institutional Order Flow Entry Drill

Price enters the FVG but does not cross its 50% midpoint - remaining below the midpoint for a bearish FVG and above the midpoint for a bullish FVG.

• Consequent Encroachment (50%)

50% retracement level of a fair value gap.

• FVG Fill

Complete fill is when price trades all the way through the gap, edge to edge. At that point the imbalance is fully rebalanced and ICT considers it spent - no longer a level worth watching. If price fills a bullish gap completely and keeps dropping, the setup has failed.

Breakaway Gap (BG) is a gap that forms at the start of a strong expansion - at the place where we expect to see SMR - smart money reversal - price breaking out of a range or consolidation and taking off. The defining characteristic is that price does not come back to this type of FVG. It runs away and leaves the gap unfilled, sometimes for a very long time.

A Measuring Gap (MG) is a Fair Value Gap (FVG) that typically forms near the midpoint of an implied range. Unlike other types of gaps, a Measuring Gap often remains unfilled. When price does revisit it, the retracement is usually shallow, offering an IOFED (Institutional Order Flow Entry Drill) before continuing in the original direction to complete the formation of the implied range.

IFVG is a FVG that fails to hold and is violated becomes an IFVG, flipping its role from support to resistance or from resistance to support.

Bullish IFVG

1. A bullish FVG forms.

2. Price trades back down through the FVG.

3. Price closes below the FVG, showing the bullish FVG failed.

4. The FVG is now treated as a bearish IFVG.

5. When price returns to the IFVG, it can act as resistance.

Bullish FVG → violated to the downside → Bearish IFVG

Bearish IFVG

1. A bearish FVG forms.

2. Price trades up through the FVG.

3. Price closes above the FVG.

4. The FVG becomes a bullish IFVG.

5. When price returns to the IFVG, it can act as support.

Bearish FVG → violated to the upside → Bullish IFVG

A BPR is created when two opposing Fair Value Gaps (FVGs) overlap or partially overlap. One FVG is typically bullish and the other bearish, creating a balanced area where price may react.

The Balanced Price Range (BPR) matters because it can provide a key PD Array within the context of HTF narrative.

1. BPR is formed by opposing FVGs
   The overlap between a Bullish FVG and a Bearish FVG creates the BPR.

2. BPR can act as a reaction point
   Price may return to the BPR to rebalance the inefficiency before continuing toward the next draw on liquidity.

3. BPR can provide an entry model
   When the BPR aligns with an HTF PD Array, CISD, MSS, or SMT, it can provide a more precise entry.

4. BPR can confirm a shift in delivery
   When formed around a CISD or MSS, the BPR can help identify the transition from one state of delivery to another. Basically, it confirms Smart Money Reversal.

If I were building an ICT BPR model, I would structure it like this:

Step 1 — Establish HTF bias

Ask:

What is the Draw on Liquidity?

Is price seeking:

• BSL? SSL? A specific HTF PD Array?

Step 2 — Establish Premium / Discount

Determine whether you're looking for:

Longs in Discount or Shorts in Premium

Step 3 — Wait for liquidity

Look for: BSL raid, SSL raid, EQH, EQL, PDH, PDL, PWH, PWL, Session liquidity level, killzone liquidity levels, etc.

The liquidity event gives you the narrative.

Step 4 — Look for displacement

You want to see the market demonstrate intent.

Look for:

• Displacement, CISD, and/or MSS.

Step 5 — Identify the BPR

Now look for:

BISI overlapping SIBI or SIBI overlapping BISI. The overlapping section is your BPR.

Step 6 — Wait for retracement

Instead of chasing the displacement, allow price to return toward the BPR.

Step 7 — Enter

Your entry can be refined around:

• BPR, FVG, IFVG, CISD.

Step 9 — Target liquidity

Your objective should be based on the Draw on Liquidity.

For example:

SSL → Bullish BPR → BSL or BSL → Bearish BPR → SSL