Imbalance and Fair Value Gaps

Normal trading is two-sided, with buyers and sellers transacting back and forth across each price. An imbalance is a fast, one-sided span where one side dominated so completely that price skipped through with little trade in between. The three-candle fair value gap is just a convenient notation for that span: the unfilled space left around a large middle candle. It is worth separating the concept from the notation. The concept is the inefficiency, a region price moved through too fast; the fair value gap is one common way to mark it, not a special object in its own right.

The reasoning for a fill is that the fast move left orders unfilled in that span, so price may revisit it to trade them before continuing, a partial retracement into the gap. In practice, fast moves are often partially retraced, which gives the idea some grounding. But the word may is doing real work. Plenty of gaps stay open for a long time, and some are never filled at all because price simply runs away. A gap is therefore a possibility worth watching, not a promise of a return, and waiting indefinitely for a fill that never comes is its own way to lose, by missing the move.

The disciplined use of a gap is as a candidate pullback target in the direction of the move. If you are looking to join an uptrend, an unfilled gap below current price is a reasonable area to watch for a continuation entry, taken with confirmation rather than blindly on the touch. The trap is treating every small gap as a magnet and forcing trades around insignificant inefficiencies; on most charts there are far more tiny gaps than meaningful ones. Restrict your attention to clear, sizeable imbalances that align with your structural read, and require confirmation at the gap, so the gap locates the trade rather than dictating it.