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Market Structure
Fair Value Gaps, Explained
When price moves too fast to trade fairly at every level, it leaves a gap. Sometimes it comes back to fix it.
NoVo Options Trading · 2026
A fair value gap (FVG) is a zone where price moved so quickly that it skipped past levels without much two-sided trading - an imbalance. On a candlestick chart it shows up as a gap between the wicks of surrounding bars. The theory: the market prefers balance, so price often returns to "fill" the inefficiency.
How they form
Fast, one-sided moves - news, a squeeze, a breakout - create them. Buyers or sellers overwhelm the book so aggressively that price jumps a range where little volume traded. That thin, skipped zone is the gap. It is closely related to a price gap and to low-volume nodes on a volume profile.
Why price returns
Because so little trading happened in the gap, there is little resting liquidity there - and unfilled orders often sit waiting. When price drifts back, it tends to move through the zone quickly and can find support or resistance at its edges. The "fill" is really the market completing trades it skipped.
A fair value gap is unfinished business. The market has a habit of coming back to settle it.
The honest caveat
Not every gap fills, and not on any schedule. Like Fibonacci levels, FVGs are partly self-fulfilling and easy to over-fit in hindsight. Treat them as a zone of interest that gains weight when it lines up with real structure or VWAP - not as a guarantee. A concept worth knowing; a religion worth avoiding.
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NoVo is a software tool for market analysis and for executing trades you initiate, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.