Inversion Fair Value Gaps

The Inversion Fair Value Gaps indicator identifies and visualizes market imbalances that have been invalidated and flipped. When a standard Fair Value Gap (FVG) is breached, it transforms into an Inversion Fair Value Gap (IFVG), reversing its role from bullish to bearish or vice-versa to highlight potential areas of support and resistance.

Usage

The indicator can be used to spot high-probability reversal or continuation zones based on ICT concepts. Traders can use the IFVG zones to identify where previous market imbalances are now acting as institutional supply or demand.

• Bullish IFVG: Occurs when a bearish FVG is closed above, suggesting the zone may now act as support.
• Bearish IFVG: Occurs when a bullish FVG is closed below, suggesting the zone may now act as resistance.
• Volume Analysis: The tool calculates and displays the volume of the bar that caused the inversion, providing insights into the strength of the breakout.
• Zone Combination: Overlapping FVG zones can be automatically combined to reduce chart clutter and highlight significant areas of confluence.

Details

Inversion Fair Value Gaps are a derivation of the standard three-bar FVG pattern. A standard FVG represents a price gap between the first bar's high/low and the third bar's low/high. When price returns and closes through this gap, the "imbalance" is considered filled and inverted. This tool tracks these transitions dynamically, offering users the ability to filter based on volume thresholds or average price ranges to ensure only significant gaps are displayed.

Settings

General Configuration

• Zone Invalidation: Choose whether a zone is invalidated by price "Wick" or price "Close" touching the boundary.
• IFVG Zone Invalidation: Choose whether an IFVG is invalidated by a "Wick" or "Close" crossing back through it.
• Zone Filtering: Select between "Average Range" (based on recent price volatility) or "Volume Threshold" (filtering gaps with higher relative volume).
• FVG Detection: Choose "Same Type" to require all three bars in the FVG formation to be the same direction, or "All" for mixed bar types.
• Detection Sensitivity: Adjusts the minimum size requirements for a gap to be detected (Low, Normal, High, Extreme).
• Show Historic Zones: Toggle to show or hide invalidated IFVG zones from the chart history.

FAQ

How do I identify a strong IFVG? A strong IFVG is typically one accompanied by a high "Occurrence Volume," which indicates significant market participation during the inversion.

What is the difference between Wick and Close invalidation? "Close" invalidation is generally considered more conservative, as it requires the candle body to break the level, whereas "Wick" invalidation removes the zone as soon as price touches the boundary.

How do I access the Inversion Fair Value Gaps tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.