Fair Value Gap Retest Strategy: Find the Gap, Wait for the Return, Enter on Rejection

What it is

A fair value gap (FVG) is a three-candle pattern where the wick of the first candle and the wick of the third do not overlap, leaving an empty space after a fast move. A bullish gap forms when candle 3's low is above candle 1's high.

Why it can work

Fast moves can leave price levels barely traded. Many traders expect the market to revisit that gap and react, which makes it a logical place to look for an entry in the direction of the original move.

The candles to expect

• Impulse: a strong middle candle that moves price quickly.
• Gap: candle 1 high and candle 3 low (bullish) do not overlap, and the gap is at least about 0.25 ATR.
• Unfilled: price has not traded all the way through the gap since it formed.
• Entry candle: price returns into the gap, and a candle rejects it — a long wick back out of the gap that closes in the trade direction.

Step-by-step entry

1. Find a strong impulse candle in the direction of the trend.
2. Mark the gap between candle 1 and candle 3.
3. Confirm price has not closed through it.
4. Wait for price to return to the gap (the 50% point is a common entry).
5. Look for a rejection candle inside or just above the gap.
6. Stop just beyond the far edge of the gap.
7. Target the nearest liquidity pool for 2R or more; risk 1% or less.

Stop and target

Stop: just beyond the far edge of the gap (about 0.25 ATR buffer). Target: the nearest liquidity pool paying at least twice the risk.

Common mistakes

• Trading gaps against the trend.
• Entering before price returns.
• Using gaps that have already been fully traded through.
• Marking tiny gaps that are just noise.

Frequently asked questions

Does every gap get filled?

No. Strong trends can leave gaps untouched. That is why you wait for a rejection candle rather than entering blindly.

Which is better: gap or order block?

Neither. Many traders look for both together: an order block that overlaps a fair value gap is a stronger zone.

Scan for it automatically

Choose this strategy in the Forextity scanner. It looks for the pattern on real candles, marks it on the chart, shows an example entry, stop, target and reward-to-risk, scores how many conditions are met, and lists the same steps with the same candle diagrams. You can also test it on your pair in the Strategy Backtester. High reward-to-risk strategies win less than half the time, so size every trade small and see the Stress Test.

Risk notice: educational content, not financial advice. Leveraged trading carries a high risk of loss. Read our Risk Disclaimer.