The order block from Lesson 3 rarely moves alone — the same fast candle that creates it usually leaves a gap behind. This lesson covers that gap, the Fair Value Gap, and the full family of imbalance terms built around it, with a real fill-and-continue trade.
What a Fair Value Gap Actually Is
A Fair Value Gap (FVG) is a three-candle pattern: the wick of the first candle and the wick of the third candle don't overlap, leaving a visible gap between them. SMC/ICT teaching reads this gap as an inefficient move — price expanded so fast that no real two-way trading happened at those prices, and it's likely to come back and "fill" the gap before continuing.
| Term | Definition |
|---|---|
| Fair Value Gap (FVG) | The 3-candle wick gap itself |
| Inversion FVG (IFVG) | An FVG that price closes back through completely — treated as flipping polarity (resistance becomes support or vice versa) |
| Balanced Price Range (BPR) | Two overlapping FVGs from opposite directions stacked on top of each other — read as a higher-probability reaction zone |
| Volume Imbalance | A looser, body-based version of the FVG — identified by candle bodies instead of wicks |
| Consequent Encroachment (CE) | The exact midpoint of an FVG (or order block) — a more conservative entry trigger than the full zone |
| Gap Fill | Price returning to trade through the FVG, "filling" it |
Trade Walkthrough: Trading a Fair Value Gap Fill
Fair Value Gap Fill and Continuation (Illustrative Example)
- The gap forms — the June 9→10→11 sequence leaves a Fair Value Gap between June 9's high (49.2) and June 11's low (49.8) — a clean, unfilled zone left by the fast rally.
- Price expands away — the move continues through June 12–15, leaving the FVG unfilled behind it.
- Price returns — the June 16–18 pullback trades back down into the gap, tagging the Consequent Encroachment midpoint near 50.1 on June 18.
- Entry — on the June 18 hold at the CE and reversal candle closing at 50.1, back above the gap's lower edge, stop below the full FVG (49.75), targeting the prior high near 51.4 and beyond.
Balanced Price Range — When Two Gaps Overlap
Occasionally an up-move FVG and a down-move FVG from a different swing overlap at the same price. SMC/ICT content calls this a Balanced Price Range (BPR) and treats it as carrying more weight than either FVG alone — two separate inefficiencies pointing at the same zone.
One 3-candle gap from one directional move. Read as a standard fill-and-continue zone.
Two overlapping FVGs from opposite directional moves, stacked at the same price. Read as a stronger reaction zone — the confluence, not just the gap itself, is what SMC/ICT content weighs more heavily here.
Why does the gap use wicks for an FVG but bodies for a Volume Imbalance?
Wicks capture the full extreme of a fast move, including brief spikes that reverse immediately — the FVG's stricter definition. Volume Imbalance uses candle bodies instead, which filters out those brief spikes and focuses on where sustained buying or selling actually closed. It's a looser, generally larger zone than the wick-based FVG.
Does an FVG that never gets filled just disappear?
No — SMC/ICT content generally treats an unfilled FVG as "live" indefinitely, the same way an untested order block stays live. In practice, older unfilled gaps get less weight than recent ones, but there's no standardized age cutoff any more than there is for order blocks.