🎯 STRATEGY
Fair Value Gaps (SMC)
Smart Money Concepts tool that detects 3-candle imbalance gaps in price, marking inefficient zones the market often returns to "fill" before continuing.
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Live Demo — Fair Value Gaps (SMC) applied to NIFTY 50 (illustrative)
PriceEMA(9)EMA(21)SMA(20)
What is Fair Value Gaps (SMC)?
Flags price imbalances — zones where price moved so quickly normal two-way trading didn't fully occur. These gaps are considered inefficient and frequently revisited (filled) later.
How It Works
- Examines every set of three consecutive candles.
- A bullish FVG exists when candle 1's high is below candle 3's low.
- A bearish FVG exists when candle 1's low is above candle 3's high.
- Each gap is drawn as a shaded box until price trades back through and fills it.
Parameters
Uses a fixed 3-candle imbalance rule; no user-configurable parameters.
Signal Interpretation
- Unfilled bullish FVGs below price often act as magnet/support zones on a pullback.
- Unfilled bearish FVGs above price often act as magnet/resistance zones on a rally.
- A gap filled and then rejected suggests the imbalance is resolved and the prior trend may resume.
- A gap filled and sliced through suggests momentum has shifted against the prior move.
- Multiple stacked FVGs in the same direction indicate a strong, fast-moving trend.
Tips & Best Practices
- Larger timeframe FVGs tend to be more significant than intraday noise gaps.
- Combine with Order Blocks: an FVG near a block is a higher-confluence zone.
- Not every gap fills immediately — some remain open for extended periods.