FVG & Order Block Complete Guide — Precision Entries

What is an FVG? (Fair Value Gap)

An FVG is a price zone where fast displacement created inefficiency.

In simple terms: Price moved so fast that buyers and sellers didn't get fully matched. That imbalance creates a void that price must eventually fill.

Bullish FVG Requirements:

• Candle 1's High < Candle 3's Low
• Strong displacement in between
• Upward momentum/direction

Interactive FVG Chart Analysis:

What the chart shows:

• Candle 1: Closes at 1.0900 (first candle)
• Candle 2: Strong bullish displacement move
• Candle 3: Opens at 1.0920 (a gap opens!)
• Yellow Zone: Between 1.0900-1.0920 = THE FVG (the inefficiency)
• Blue Line: Price returns to fill the FVG = The magnet effect

Key Insight: Once a Fair Value Gap is formed, price almost ALWAYS returns to fill it at some point. This is one of the most reliable market mechanics in trading.

Bearish FVG Requirements:

Candle 1:  Close = 1.0900
Candle 2:  (strong selling)
Candle 3:  Open = 1.0880

Condition: Candle 1's Low > Candle 3's High

On Chart:

1.0900 ├─ ← Candle 1 Close
1.0890 │     ↓ This gap = FVG
       ├─ ← Candle 3 Open (gap down)
1.0880 ┘

What is an Order Block?

An Order Block is the candle where institutional traders loaded major positions.

Bullish Order Block:

Strong candle during upward move
↓
Sellers try to break it
↓
Fail and bounce back up

This candle = Bullish Order Block

Bearish Order Block:

Strong candle during downward move
↓
Buyers try to push it higher
↓
Fail and reverse back down

This candle = Bearish Order Block

Order Block Visual Guide

Understanding the diagram:

• Left side: Shows Bullish Order Block (institutional buy zone)
• Right side: Shows Bearish Order Block (institutional sell zone)

Pattern Recognition:

The chart clearly shows:

1. Initial Strong Move (red down or green up)
2. OB Zone highlighted - this is where institutions filled orders
3. Pullback/Retracement - price moves away briefly
4. Retest Phase - price returns to OB zone
5. Final confirmation - candle pattern validates entry

Note: The real power comes when OB zone + FVG + Supply/Demand zone all overlap = massive confluence

FVG + Order Block Together

The Strongest Setup

Order Block with FVG Inside:

         Bullish OB
         ┌────────┐
         │ ██████ │ ← Strong buy candle
1350 ────┤ ██████ │
         │ ██████ │
1340 ────┼────┬───┤
         │    │   │
         │    ↑   │ ← FVG here
1330 ────┼────┴───┤
         │        │
1320 ────┴────────┘

Why This Works:

1. Order Block = institutional presence
2. FVG = technical void to fill
3. Together = high probability rebalance + push

Complete Entry Setup

Pre-Check:

1. High timeframe trend (4H or Daily) = Uptrend
2. Swing Structure = Making higher highs and higher lows
3. Any CHOCH yet? = No, still bullish

Finding Entry Zone:

1. Identify Order Block = That strong buy candle
2. Find FVG = Gap inside or near Order Block
3. Multiple confluences? = 2+ levels confirmed

Entry Rules:

When price enters FVG:
↓
Watch for bullish candle formation
↓
Candle Close above Order Block
↓
ENTER - Place stop below Bullish OB

Real Chart Case Study (GBPUSD 15M)

Timeline:

T1: 1.2800  London Open - Strong buy candle (Bullish OB!)
            High: 1.2825, Low: 1.2775, Close: 1.2810
            ↓
T2: 1.2820  Minor pullback
            High: 1.2830, Low: 1.2815
            ↑
            FVG created: Between 1.2810 (T1 Close) and 1.2815 (T2 Low)

T3: 1.2790  (Round number support test)
            High: 1.2810, Low: 1.2785

T4: 1.2800  FVG zone but weak candle
            High: 1.2805, Low: 1.2790

T5: 1.2815  ✓ Success! Bullish candle above Order Block
            High: 1.2825, Low: 1.2805, Close: 1.2820

🎯 ENTRY ZONE: 1.2800 - 1.2810
   STOP: 1.2775 (Below Bullish OB)
   TARGET: Next Swing High = 1.2850

Result:

• Entry: 1.2808
• Stop: 1.2775 (33 pips risk)
• Target: 1.2850 (42 pips reward)
• Risk:Reward = 1.27:1

Multi-Timeframe Strategy

For Scalpers (5M & 15M):

• FVGs form more frequently
• Held for shorter duration
• Quick entries and exits

For Swing Traders (1H & 4H):

• FVGs are more reliable
• Held for longer duration
• Better profit targets

FVG & Order Block Failures

When FVG is Never Hit:

Likely causes:
1. Countertrend on higher timeframe
2. Major news release
3. Order Block wasn't actually strong
→ Skip entry—wait for next opportunity

When Signal Was Wrong:

Avoid:
1. Trend reversed exactly before entry
2. Confluence was only one level
3. Near round numbers = high noise

Checklist: FVG + Order Block Setup

☐ Trend confirmed on high TF?
☐ Swing Structure valid?
☐ Order Block clearly identified?
☐ FVG inside or near Order Block?
☐ 2+ confluences present?
☐ Stop loss level defined?
☐ Risk/Reward ≥ 1:1?

Key Takeaways

✓ FVGs = Price inefficiencies that act as magnets

✓ Order Blocks = Institutional order clusters

✓ Together = Highest probability setups

✓ Confluences = Multiple confirmations at one level

Next: Supply, Demand, and Liquidity Hunting — where smart money actually hides.

Supply & Demand with Liquidity