Inverse FVG with Rejections

The Inverse FVG with Rejections indicator identifies Inverse Fair Value Gaps (IFVGs) and highlights price rejections within these significant liquidity zones to identify potential trend reversals or continuations.

Usage

The Usage section describes how the script can be used to identify market imbalances and subsequent price reactions.

• Identifying IFVGs: When a standard Fair Value Gap (FVG) is violated by a full candle close through the area, the indicator converts it into an Inverse FVG. This transition suggests a shift in market sentiment, where a previous support zone becomes resistance or vice versa.
• Time-Based Filtering: Users can restrict the detection of FVGs to specific sessions (e.g., the New York session). This ensures that only gaps formed during periods of high liquidity and volume are tracked.
• Rejection Analysis: The tool identifies swing highs and swing lows that occur specifically within the boundaries of active FVGs or IFVGs. This helps traders confirm if a zone is being respected as a pivot point.
• Confluence Points: A unique feature allows the detection of "Regular + Inverse" rejections. These occur when a pivot forms in a location where a regular FVG and an IFVG overlap, signifying a high-interest structural area.

Details

Fair Value Gaps are defined as energetic price movements that leave a gap between the wicks of the preceding and following candles. This script tracks these zones dynamically:

1. Displacement: A user-defined displacement multiplier determines the "energy" required to qualify a gap as an FVG, filtering out insignificant market noise.
2. Persistence: An FVG remains active until the price closes entirely through its range. Once breached, it is categorized as an IFVG.
3. Removal: An IFVG is removed from the chart once the price closes through its boundaries again, indicating that the zone is no longer a valid structural point.
4. Rejections: Rejections are calculated using fractal/swing pivot logic. The "Rejection Strength" setting determines the number of bars on either side of a high or low required to confirm a pivot.

Settings

Settings

• Show Regular FVG: Toggles the visibility of standard Fair Value Gaps.
• Show Inverse FVG: Toggles the visibility of Inverse Fair Value Gaps.
• Extend Boxes: Extends the FVG/IFVG boxes to the right of the chart.
• Timeframe: Sets the timeframe from which FVGs are derived.
• Displacement: Adjusts the sensitivity for gap detection; higher values require more aggressive price moves.
• Display Limit: The maximum number of active zones displayed on the chart simultaneously.
• Session: Defines a specific time window (in UTC-5) for capturing new FVGs.

Rejections

• Rejection Strength: Sets the pivot lookback/lookforward period for detecting swing highs and lows.
• Regular FVG: Enables rejection markers (triangles) specifically within standard FVGs.
• Inverse FVG: Enables rejection markers specifically within Inverse FVGs.
• Regular + Inverse FVG: Enables markers for rejections that occur within overlapping FVG and IFVG zones.

FAQ

How do I interpret an Inverse FVG? An Inverse FVG is a standard FVG that has been "run over" by price. It is often treated similarly to a "breaker" or a "support turned resistance" level, where the market may retest the zone before continuing in the new direction.

Why are some FVGs not showing up? Check your Displacement and Session settings. If the price move is not energetic enough or if it occurs outside the defined session time, the gap will not be recorded.

How can I access the Inverse FVG with Rejections? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.