Fair value gaps: what they are, and do they really get filled?

Three candles and a gap

Take three candles in a row. If the middle one moved fast and the first and third candles' wicks do not overlap, the prices between them traded only during the middle candle. That stretch is a fair value gap (FVG): bullish when the third candle's low is above the first candle's high, bearish in the mirror case. SMC reads it as an imbalance — one side overwhelmed the other — that price tends to come back and "fill".

The terminal's rule adds filters so that every small gap does not count: the middle candle must be an impulse (a body of at least half its range, and a range of at least 1 ATR), and the gap must be at least 0.3 ATR tall. After it forms, a gap is reached when price trades back into it, filled when price trades through all of it, and inverted when a candle closes beyond its far edge — the terminal then shows it as an inverse gap.

Fair value gaps — BTC on 4-hour candles, 18 August to 10 September 2026. The breakout of 19–21 August left four gaps; the first, between 64,539 and 67,825, was 3,286 dollars tall. The highest, 75,786–76,236, was traded through at 04:00 UTC on 23 August. The other three were never reached: up to 27 October the lowest price after them was 74,968, 457 dollars above the nearest. A gap formed at 16:00 UTC on 3 September was filled at 12:00 UTC on 8 September, and at 08:00 UTC on 10 September a candle closed below it.

Do gaps get filled?

Most gaps are reached, and quickly — but gaps also form close to the price: about half of them within half an ATR of the close. A fair test asks: is a gap reached more often than any price the same distance from the close? For every candle on the chart, check whether price reached a level that many ATR away within 30 candles, and compare.

Check the claim — on BTC/USDT 4-hour candles, 157 of 187 gaps (84%) were reached within 30 candles and 130 (70%) filled; any price at the same distance was reached 88% and passed 71% of the time. Hourly candles: 217 of 254 (85%) reached and 174 (69%) filled, against 85% and 69%. Daily candles: 62 of 83 (75%) reached and 49 (59%) filled, against 83% and 67%.

Gaps were reached and filled no more often than any other price at the same distance. "Gaps get filled" is true mostly because price moves around: it reaches nearby prices all the time, gap or not.

Check yourself · 1 of 3Three 4-hour candles: the first's high is 64,539, the third's low is 67,825, the middle candle rose fast. Where is the gap?

ABetween 64,539 and 67,825BBelow 64,539CAbove 67,825

Show the answer

A bullish gap runs from the first candle's high to the third candle's low.

Check yourself · 2 of 3What is an inverse fair value gap?

AA gap that was never reachedBA gap a candle has closed through, now watched from the other sideCA bearish gap

Show the answer

When a candle closes beyond the far edge, the terminal shows the gap as inverted.

Check yourself · 3 of 3On BTC's 4-hour chart, were gaps reached more often than any price at the same distance?

AYes, almost always moreBNo: 84% for gaps, 88% for any priceCGaps were never reached

Show the answer

Most gaps are reached because they form close to the price — and nearby prices are reached just as often.

Takeaways

1. A fair value gap: three candles, a fast middle one, and no overlap between the first and third wicks.
2. Reached, filled, inverted: what happened to the gap afterwards.
3. Gaps form close to price, so most are reached — but no more often than any price as far away.
4. Some gaps stay open for months.

Open BTC in the terminal — fair value gaps are under the cube button above the chart

Further reading

• Kline (candle) data, where this lesson's candles come from — Binance Spot API docs ↗