Bullish Fair Value Gap: Rules, Examples and Practice
Mark the exact non-overlap between the outside wicks.
Technical terms explained
Fair Value Gap
Look at three candles in order. When the first and third candle price ranges do not overlap, the price band between them is called a Fair Value Gap in ICT/SMC vocabulary. Our rule uses the full wick ranges and requires a positive-width band.
Bullish FVG
The upward version of our three-candle gap rule: first high < third low.
Bullish and bearish
Directional descriptions: bullish refers to a rising-price interpretation, bearish to a falling-price interpretation.
Timeframe
The duration represented by one candle. M5 is five minutes, M15 fifteen minutes and H1 one hour.
ICT and SMC
ICT refers to The Inner Circle Trader, the educational identity of Michael Huddleston. SMC means Smart Money Concepts, a wider community label for structure and liquidity approaches.
Take three completed consecutive candles. A bullish FVG exists under our geometric rule when the first high is strictly lower than the third low. The gap is the interval between those prices. The middle candle may look forceful, but its body is not the boundary. A gap on this timeframe does not prove no trading occurred there on every lower timeframe.
Our operational rule
Bullish boundaries: first high to third low, with third low > first high.
Worked example
The first high is 1.08012 and third low is 1.08045: mark 1.08012–1.08045.
Counterexample
If the third low equals or falls below the first high, no strictly positive bullish FVG exists.
Watch for this mistake
Using the middle body’s open and close as the zone.
Charts are synthetic. These classification rules are not evidence of profitability.
Source and conventions
Lab operational definitions · version 1
Original exercise conventions: strict outside-wick FVG geometry; two completed neighbours on each side for swings; completed close through declared references; same-candle cross-and-return for a sweep. These are educational classification rules, not demonstrated trading edges.