Understanding FVG in Trading

Fair Value Gaps come in two flavors that traders should recognize.

The red FVG signals a high-timeframe price imbalance created by sharp moves. When price revisits this zone later, it typically acts as solid resistance or becomes your target area. Think of it as the market leaving behind a gap it often wants to fill.

The green FVG sits smaller, existing within the internal structure. This one's your friend for fine-tuning entries—it helps identify precise spots to jump in and captures those quick reactions in the short term.

Knowing the difference between these two lets you layer your strategy: hunt bigger moves with red zones, dial in timing with green ones.