# Inversion FVG A Smart Money Concepts / ICT concept (Imbalance taxonomy) in the LuxAlgo Library, with 3 indicator implementations. ## What is an Inversion FVG? An inversion fair value gap is a [fair value gap](https://www.luxalgo.com/library/concept/fair-value-gap/) that failed and flipped roles. A bullish gap is expected to act as support when price trades back into it; if price instead closes through the entire gap, the level inverts: the same span is now watched as resistance. A violated bearish gap inverts into support the same way. Nothing about the gap itself moves; what changes is which side of it traders expect to be defended. The logic is role reversal applied to imbalances. A gap that fails traps the traders who leaned on it; longs who bought into a bullish gap are underwater once price closes below it, and their exits supply the market on the first retest from beneath. Smart Money Concepts / ICT traders like the setup for its built-in invalidation: the idea is expressed against the far side of the gap, and if price closes back through and reclaims the span, the inversion is simply wrong. ## How to identify an inversion fair value gap An inversion only exists after an ordinary gap has demonstrably failed, so the read happens in two stages: first the gap, then the violation. 1. Locate a standard three-candle fair value gap and note its intended role: a bullish gap below price should act as support, a bearish gap above price as resistance. 2. Watch the return. A wick that probes into the gap and holds is normal behavior (the gap doing its job), not an inversion. 3. Confirm the violation. The common requirement is a candle body closing beyond the far side of the gap; a wick-through alone is usually read as a probe into the gap rather than a genuine inversion. Conventions differ on strictness, so know which rule you are applying. 4. Flip the role and wait for the retest: the violated bullish gap is now treated as resistance (a violated bearish gap as support), and rejection on the first return is the classic sign the inversion is live. ## How traders use it - As a retest entry: after the close-through, the first return to the inverted span is watched for rejection, with the stop just beyond the far side of the gap; a reclaim of the span invalidates the whole idea, so risk is defined by construction. - As the confirmation leg of sweep-based models: a [liquidity sweep](https://www.luxalgo.com/library/concept/liquidity-sweep/) takes stops beyond a key high or low, and the [displacement](https://www.luxalgo.com/library/concept/displacement/) away from it closes through an opposing gap; the inversion is read as evidence the reversal has follow-through rather than being another probe. - As a bias flip: a gap that holds says the original imbalance is being defended, while the same gap inverting says the other side has taken control, often alongside a [change of character](https://www.luxalgo.com/library/concept/change-of-character/) on the same timeframe. - As a quality filter: when gaps invert and are then reclaimed in quick succession, imbalance-based reads are failing in both directions, which many traders take as a signal to stand aside rather than keep flipping with each violation. ## Inversion FVG vs. neighboring concepts - **Fair Value Gap** (https://www.luxalgo.com/library/concept/fair-value-gap/): The parent. A fair value gap is expected to hold in its original direction; an inversion FVG is what remains after it demonstrably failed, the same span on the chart with the opposite expectation attached. - **Breaker Block** (https://www.luxalgo.com/library/concept/breaker-block/): Both are failed-and-flipped structures, but a breaker is a violated order block (real traded candles), while an inversion FVG is a violated gap between candles. They often overlap and get used interchangeably as flip zones. - **Balanced Price Range** (https://www.luxalgo.com/library/concept/balanced-price-range/): A balanced price range is two opposing gaps overlapping: fast delivery both ways through the same span, leaving a two-sided zone. An inversion FVG is one gap violated once, leaving a single flipped direction. ## FAQ ### What confirms that a fair value gap has inverted? The common standard is a candle body closing through the far side of the gap. A wick alone usually doesn't count; that reads as a probe or stop run into the gap rather than an inversion. Conventions vary between traders and tools: some require the whole gap closed through, others act on a close beyond its midpoint (its [consequent encroachment](https://www.luxalgo.com/library/concept/consequent-encroachment/)), so know which rule your chart is drawing. ### Is an inversion FVG bullish or bearish? It points opposite to the gap that failed. A bullish gap that price closes below becomes a bearish level (resistance overhead), while a bearish gap that price closes above becomes support. Because the flip runs against the original imbalance, inversions are generally used as reversal or bias-change evidence, not as continuation signals in the gap's first direction. ### Do inversion FVGs always hold as new support or resistance? No. An inversion is a hypothesis about trapped traders, not a guarantee, and plenty of inverted gaps are reclaimed on the first retest. That failure case is useful in itself: a reclaim puts price back on the original imbalance's terms, which is why most traders treat it as a hard invalidation and size the position around it. ## Implementations in the Library - Sweeps & IFVGs (LuxAlgo): https://www.luxalgo.com/library/indicator/sweeps-ifvgs/ - Session Sweep & iFVG RR (LuxAlgo): https://www.luxalgo.com/library/indicator/session-sweep-ifvg-rr/ - Inversion Fair Value Gaps (IFVG) (LuxAlgo): https://www.luxalgo.com/library/indicator/inversion-fair-value-gaps-ifvg/ ## Related concepts - Fair Value Gap: https://www.luxalgo.com/library/concept/fair-value-gap/ - FVG Behavior Rules: https://www.luxalgo.com/library/concept/fvg-behavior-rules/ - Immediate Rebalance: https://www.luxalgo.com/library/concept/immediate-rebalance/ - Balanced Price Range: https://www.luxalgo.com/library/concept/balanced-price-range/ - Implied FVG: https://www.luxalgo.com/library/concept/implied-fvg/ - Volume Imbalance: https://www.luxalgo.com/library/concept/volume-imbalance/ - Opening Gap: https://www.luxalgo.com/library/concept/opening-gap/ - New Day Opening Gap: https://www.luxalgo.com/library/concept/new-day-opening-gap/ - New Week Opening Gap: https://www.luxalgo.com/library/concept/new-week-opening-gap/ - Consequent Encroachment: https://www.luxalgo.com/library/concept/consequent-encroachment/ --- Source: https://www.luxalgo.com/library/concept/inversion-fvg/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/