When the market moves with true aggression, it skips prices. One candle's low never overlaps the previous candle's high, leaving a three-candle window where only one side transacted. That window is a Fair Value Gap: an imbalance, the market's unfinished business.
Why gaps attract price
Auction logic: markets exist to facilitate trade, and prices where almost no trade occurred are unfinished auctions. Resting institutional orders, value-seeking algorithms and simple mean reversion all pull price back toward the gap, the "fill", after which the original move frequently resumes.
Not all gaps deserve attention
Grade them like everything else: gaps born of displacement (genuine conviction candles) outrank drift; gaps aligned with the higher-timeframe trend outrank counter-trend ones; and gaps stacked inside an order block at a structural level are the elite tier: the combination that turns a zone into a scalpel.
The entry play
In an uptrend after a BOS: mark the impulse's FVG, set a limit in the gap (commonly at its midpoint, the "consequent encroachment"), stop beyond the order block below, targets at the next liquidity pool. Price dips into the imbalance, finds your order, and, when the read is right, leaves without you needing to chase anything.
When a gap fails
Price slicing through a with-trend gap without reacting is information: conviction has flipped sides. A failed FVG often marks the exact spot reversals begin, which is why gap behaviour, not just gap presence, appears inside P4 signal reasoning as part of confluence #4.
Education only, not financial advice. Trading carries risk of loss; never trade money you cannot afford to lose.
