Bullish Fair Value Gap
A Bullish Fair Value Gap (FVG) is a three-candle imbalance where the market moves upward rapidly, leaving a gap between the first candle’s high and the third candle’s low. This area often acts as dynamic support if price returns, representing an area of inefficiency caused by strong buying pressure. Traders use these zones as potential high-probability entries or retracement areas.
Definition
A Fair Value Gap is an imbalance left when price moves quickly with little trading between certain levels. A bullish FVG is formed when the high of the first candle is below the low of the third candle in a 3-candle sequence during an upward move. This creates a zone of untested price, which often acts as support or a retracement target.
Why It Matters
Bullish FVGs highlight areas where the market temporarily bypassed fair pricing due to strong buying pressure. These imbalance zones often attract price back, offering potential reaction areas for longer trades when aligned with overall trend context and confluence factors.
How to Identify
- Locate three consecutive candles where price is moving upward.
- Check that the high of the first candle is lower than the low of the third candle — this creates the bullish FVG zone.
- Draw the FVG zone between first candle’s high and third candle’s low.
- Verify the big displacement (middle candle) shows strong momentum compared to preceding candles.
- Look for a retracement back into this zone for potential bias continuation.
How to Trade
- Confirm overall bullish market structure on higher timeframes.
- Mark the bullish FVG zone as defined above.
- Wait for price to return into the FVG zone (lower timeframe reaction preferred).
- Look for rejection candles or structure support inside the zone (pin bar, engulfing, liquidity clusters).
- Enter long with stop just below the zone.
- Set targets at the next swing high or external liquidity pools.
Common Confusions
IF the imbalance is defined by three candles with non-overlapping wicks between 1st and 3rd THEN it’s a Fair Value Gap. IF the gap appears only due to session open/close without three-candle structure THEN it’s a session gap, not FVG.
IF price revisits the zone and shows reaction THEN trade possibility exists. IF price never returns then the FVG acted as an imbalance without fill — no entry signal.
IF the gap is formed initially and later flipped by price action (price closes beyond then returns) THEN it might be an Inverse FVG. IF the gap remains unbroken and retraces from above THEN it is a standard Bullish FVG.
Pre-Trade Checklist
- HTF bias aligned bullish?
- Clear 3-candle FVG with clean gap?
- Liquidity below/within gap noted?
- Session timing supportive (London/NY)?
Explore this concept in Aurora X
Interactive visual examples, AI-powered explanations, and a full library of 90+ ICT concepts.
Try Aurora X FreeRelated Concepts
More FVG Concepts
Educational resource only. Not financial advice. Trading involves substantial risk of loss.