Which statement about using FVGs is most accurate?

Which statement about using FVGs is most accurate?

• A. Enter immediately when an FVG appears.
• B. FVGs are only relevant in uptrends.
• C. Use FVGs to identify liquidity voids and wait for retracement.
• D. FVGs guarantee an immediate breakout.

Answer: (C)

Fair value gaps show where price moved too quickly, leaving a liquidity void in the market. The most useful approach is to regard these gaps as zones where liquidity will likely return and to wait for price to retrace into that area before taking a trade. This gives a more reliable entry with better risk control, because you’re trading a return to fair value rather than chasing a fast, potentially exhausted move. FVGs can occur in both up and down moves, not just uptrends, and they do not guarantee an immediate breakout—the market can continue, retrace, or reverse without filling the gap.

Fair value gaps show where price moved too quickly, leaving a liquidity void in the market. The most useful approach is to regard these gaps as zones where liquidity will likely return and to wait for price to retrace into that area before taking a trade. This gives a more reliable entry with better risk control, because you’re trading a return to fair value rather than chasing a fast, potentially exhausted move. FVGs can occur in both up and down moves, not just uptrends, and they do not guarantee an immediate breakout—the market can continue, retrace, or reverse without filling the gap.