Inversion Fair Value Gaps (IFVG)
Feb 1, 2024
The Inversion Fair Value Gaps (IFVG) indicator is a robust tool designed to identify key support and resistance zones by leveraging the concept of mitigated Fair Value Gaps (FVGs), as introduced by ICT. It provides traders with insights into potential price reversals and trend continuations by recognizing when price mitigations transform traditional FVGs into "Inverted FVGs."
How to Trade with the Inversion Fair Value Gaps Indicator?
The IFVG indicator makes it easier to pinpoint zones of support or resistance by detecting when an FVG is mitigated, thus creating an "Inverted FVG." This identification is crucial for traders looking for potential price action setups. When the price closes beyond the FVG area in contradiction to its initial bias, mitigation is said to occur.
- Inverted Bullish FVGs transform into potential resistance zones.
- Inverted Bearish FVGs evolve into potential support zones.
Once an FVG is mitigated to form an inversion FVG, a unique signal is triggered each time the price retests and breaches the IFVG zone in the direction relative to the original FVG. This process aids in understanding price dynamics in real-time and allows for informed trading decisions based on confirmed retests.
It’s important to understand that IFVGs are dynamic, and once the price mitigates an IFVG, all related visual elements such as areas, lines, and signals will be reset. This ensures that traders are working with the most relevant data at any given time.
The IFVG indicator is built for real-time analysis rather than historical backtesting, as historical data does not account for IFVG mitigations—a crucial aspect of this trading strategy as conceived by ICT. It ensures real-time price action is analyzed with an eye towards unmitigated IFVGs, which indicate significant market reactions.
Customizable Settings for Optimal Use
- Show Last: This feature lets you define how many recent FVG inversions, in bullish/bearish pairs, will be visible, starting from the current and going historically backwards up to a maximum of 100 pairs.
- Signal Preference: Users can choose to generate signals based on either (Wicks) or (Close) prices, adapting to different trading strategies.
- ATR Multiplier: By utilizing ATR to filter FVGs based on width, only those inversions with a greater width than ATR multiplied by ATR width will be considered.
Stay Informed with Alerts
This script offers comprehensive alert capabilities for all its signals, providing timely updates to stay ahead in trading execution.
Bearish Signal Alerts
- A bearish alert is triggered when the price returns to and rejects a bearish inversion zone.
Bullish Signal Alerts
- A bullish alert occurs when the price revisits a bullish inversion zone and exits from the top.
FAQ
What is the Inversion Fair Value Gaps Indicator?
The IFVG indicator identifies key support and resistance levels by utilizing the concept of mitigated Fair Value Gaps to define Inverted FVGs, aiding in real-time trading decisions.
How can I access the Inversion Fair Value Gaps Indicator?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
Why is the IFVG indicator not recommended for historical backtesting?
It is designed for analyzing real-time bars as historical signals do not consider the real-time dynamic nature of IFVG mitigations which are crucial for its effective application.
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