Fair Value Gaps (FVG) and how to trade them

For crypto traders, finding price inefficiencies in the fast-paced world of trading can put you ahead of the competition. And one of these inefficiencies is something we refer to as the FAIR VALUE GAP (FVG) — a concept that very few are looking at in terms of futures and how it can help provide an edge in predicting market direction. However, as price action moves at neck-breaking speeds on both the way up and down, these should be considered FVGs or fake volume gaps, because look far enough back in time and these prior vacuums of liquidity will then become interesting zones for those looking to buy & sell. In this blog post, we will look at the significance of FVGs as well as how smart traders can employ them in their trading strategies to increase profits.

Table of Contents

1. FVG & Timeframes
2. How to use and identify FVG’s
3. FVG & PO3

FVG & Timeframes

FVGs represent price imbalances, where one side of the market liquidity is inefficently offered.

You will find FVG’s in a 3-candle gap in the price chart.

The higher the TF, the more influential the FVG-

Daily FVG is far more impactful in price than a 4H FVG.

Prioritize the HTF FVG’s.

This example uses two timeframes: 4h/15min.

Instructions and definitions are on the diagram.

Step 1: A 4h fair value gap (FVG) is formed.

Step 2: Price trades into the 4h FVG

How to use and identify FVG’s

You must trade FVG’s that are in alignment with the current DOL + narrative.

It’s crucial that you trade FVG’s within the context of the market and the TF you are using.

FVGs can be identified by looking for a large candle, whose neighboring candles’ upper and lower wicks do not fully overlap the large candle

The space between the wicks of the neighboring candles is the FVG. Not all gaps are FVGs.

FVG & PO3

We can find also FVG’s in PO3 strategy. Click here to read or PO3 trading post

In the accumulation zone, smart money builds here LONG positions.

It’s normally a ranging zone, with several FVG’s in LTF

In the manipulation zone, normally we will find BEARISH FVG’s.

Manipulation anticipate a bullish range expansion.

Therefore, bearish movements will happen here, BEFORE distribution.

In the distribution zone, is where smart money begins to offload their positions.

In this phase, we will normally find BULLISH FVG’s, since price is expanding higher.

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Thanks to CryptoSoulz for all the trading information ( follow on X )