How to identify a genuine Fair Value Gap (FVG)

There's only one real fair value gap in play here, and that's the middle one. Why's that? Let's break down all three. First up, the top gap looks nice but it’s sitting in the premium area, above the 50% mark of the range between the last swing low and the last swing high. This means the price is on the expensive side. In a premium zone, we should only be looking to sell, not buy. So, we can disregard that one. Then there's the lowest fair value gap. Take a closer look, it's below the last higher low of the trend. If the price drops that far, it indicates a Change of Character (choch), and the structure shifts, meaning we shouldn’t be looking to buy anymore. So, we can skip that one as well. This leaves us with the middle FVG, which is above the last higher low, keeping the bullish structure intact. Plus, it's in the discount zone, below the 50% equilibrium level, meaning the price is cheap. This is where we should consider entering. Not too high, not too low. Just right in line with the structure and price positioning. Just my two cents: not every fair value gap is worth trading. It’s the context that determines which ones are legit. What exactly is a Fair Value Gap? Just a heads up: this is for educational purposes, not financial advice. If you've got questions or other insights, feel free to share them here too.

Aside marking out your fair value gap, this doesn’t translate to your trade usually going in your favour, the price can still come back to fill this fair value gap and still not go in same direction likd you, some traders use Fibbonacci retracement indicator which is not bad but also doesn’t guranteed the market will still obeys. Even after spotting a fair value gap your candle that fills it actually tells you if the market will respect the value gap because obviously you can have more than one fair value gap in a super bullish market move or super bearish market move. But what I look out at is that the candle coming into the fair value gap, if it’s a strong rejection candle which fails closes below 50% level of the FVG plus it takes out previous candle low. Then I look at the market reaction in lower time frame before entering (15m time frame) So spotting an FVG doesn’t mean that’s a buy or sell zone, look for other factors to help build your confluence

Understanding the concept of a fair value gap can increase your chances of being profitable in trading. But truthfully that is not all you should know because there are still some other concepts in trading that you need to master and have knowledge of so that you can be able to spot them when the market gives such opportunities or such indications. For instance, you need to be conversant also with liquidity zones, order blocks, and market structure too. You will be a better trader with all this knowledge. In trading, you have to learn a lot but somehow still find a way to keep it all simple.

This is not how I determine which one is a valid FVG or not. Well, we have different ways to know which one is valid or not, but how exactly do you validate if the FVG is invalid or not? For me, I use the fixed volume profile here to determine those valid FVGs, or I manually check the volume where there is a large spike or candle but not much volume. Those, for me, are valid gaps, but it is way simpler if you use a volume profile to easily spot them.

Fair value gap is part of the confluence I look for to validate any of my trade entry, while learning about fair value game in trading Bitcoin or any other crypto, it's also wise to understand that most times, even a valid fair value gap does not hold but rather gets violated. So, while using it as your confluence in trading, you must watch to see how price is going to react in that gap before you take your trade. Learning this one should also come along with learning valid order blocks.

I always consider FVG to be the next stop for the current price action and isn't factor that determine it will go up or down. If I see the candle is forming bearish pattern, next resistance will probably be around the lower price FVG and that could be a good price to take profit if you are shorting. More often than not the price will show a sign of trend reversal around biggest FVG.

That's why it should be mandatory for traders not to neglect using Stop Loss. Every mentor should tell their mentees that. Market has a mind of its own, like they say. It doesn't always do what you think it should do, even when it gives us that clarity of what it wants to do. Just like birds, price doesn't fly straight. Understanding concepts is thoeritical while trading itself is practical. Only when what is understood is put to practical reality, with emotions completely put under control, that a trader can become profitable. Without that, that knowledge is a waste.

To me it all depends on the condition of the market, in forex nothing is scripted Evey thing works with conditions, and those conditions are based on satisfaction of the market, If the market is satisfied, movement become smooth, but if the market is not satisfied movement becomes choppy and also risky to trade So the goal is not just about fvg, thread line, Oder block etc .. the goal is about understanding and knowing when the market is satisfied before you can choose to enter at the already flowing price And the satisfaction I'm talking about is balancing of price by taking out stop losses (liquidity) so that large Oders can be taken out by institutions without causing chaos and spike. This is something that has to be studied by all forex trader that are serious about it

The concept of the Fair Value Gap can't be profitable if only traders are relying their trading strategies specifically by it without considering other strategies because, the volatility concept of the market mostly moves irrational and trajectories. So a lot of knowledges is required for traders to acquire in order to figure several means to place their trades just to catch the candle at the spot even as volatilities remains unpredictable. And let's also not forget that this FVG is imbalanced and price might also not be retraced after intensity trend moves.

If op was faced with an actual chart, perhaps he would determine a different fvg point. That's what some experts say, that there is no technical analysis method that can truly be used as a universal reference. People only look for forms that can be said to be a pattern that they can consider valid with their own intuition.

There's really so much to learn and use at ones discretion when trying to make the best out of trading and FVG knowledge is just one of those important things to learn among others. The FVG on any platform for trading you use might entail a trader to require this knowledge during a specific timeframe window to trade and am sure AI tools can even help make this known after setup and coding, so as to detect them before entering a trade. The bottom line as concerns FVG application during trading is to understand how to lookout out for the main features like timeframe, weak gap, location and candle size in order to detect if the FVG is weak/invalid or strong/valid.