How many candles typically define a standard fair value gap drawing?

• A. Two candles.
• B. Three candles.
• C. Four candles.
• D. Five candles.

Answer: (B)

A fair value gap is an area on the chart where price moved away in one direction, leaving an untraded price zone that traders identify as an inefficiency. To visualize this gap clearly, the standard approach uses three candles: the left boundary candle to establish the first edge of the gap, a middle candle that shows the move that creates the gap, and the right boundary candle that marks the other edge. The gap is drawn between the high (or upper edge) of the left boundary and the low (or lower edge) of the right boundary, capturing that untraded zone.

Using three candles is essential because you need both edges to define the space; fewer than three can’t establish the full boundaries, while more than three isn’t necessary for this standard definition. That’s why the typical answer is three candles.