Fibonacci Inversion Fair Value Gaps

The Fibonacci Inversion Fair Value Gaps indicator identifies and visualizes market imbalances that have been invalidated and reversed. By combining the concept of Inverse Fair Value Gaps (IFVGs) with Fibonacci retracement levels, the tool highlights key support and resistance zones that emerge when bullish imbalances become bearish, or vice versa.

Usage

The indicator can be used to spot potential reversal points or "re-test" areas within high-momentum moves. When a Fair Value Gap is breached by price, it is considered "inverted," changing its polarity.

• Zone Identification: Bullish IFVG zones are rendered when a bearish FVG is invalidated, and Bearish IFVG zones appear when a bullish FVG is invalidated.
• Fibonacci Support/Resistance: The tool automatically plots up to three customizable Fibonacci levels (defaulting to 0.618, 0.5, and 0.382) within the IFVG zone. These levels often act as precise magnets or turning points for price action.
• Filtering Imbalances: Users can filter for specific gap sizes using "Average Range" or "Volume Threshold" to ensure only significant market imbalances are displayed.

Details

Fair Value Gaps (FVG) represent price inefficiency or imbalance where buying or selling pressure is so intense that it leaves a "gap" between the wicks of surrounding candles. An Inverse Fair Value Gap (IFVG) occurs when price returns to this gap and closes beyond it, effectively flipping the zone's sentiment. This indicator tracks these transitions and applies Fibonacci mathematics to the height of the gap to provide internal structure to the zone.

Settings

• General Configuration
  • Zone Invalidation: Choose whether a FVG or IFVG is invalidated by a "Wick" touch or a candle "Close" beyond the zone.
  • Zone Filtering: Select between "Average Range" (compares gap size to recent ATR) or "Volume Threshold" (filters based on volume intensity).
  • FVG Detection: "Same Type" requires all 3 bars forming the gap to be the same direction; "All" allows mixed bar types.
  • Detection Sensitivity: Adjusts the threshold for gap detection (Extreme, High, Normal, Low).
  • Show Historic Zones: Toggles the visibility of invalidated past IFVGs for backtesting purposes.
• Fibonacci Retracement Levels
  • Fib 1/2/3: Enable/disable and set the specific Fibonacci ratios to be displayed within the IFVG zones, including line style and color customization.

FAQ

How do I interpret the Fibonacci lines inside the IFVG? These lines represent mathematical subdivisions of the imbalance. Traders often look for price to find support or resistance specifically at the 0.5 (equilibrium) or 0.618 levels within the box.

What is the difference between "Wick" and "Close" invalidation? "Wick" invalidation is more sensitive, marking a zone as broken as soon as price touches the boundary. "Close" invalidation requires a candle body to terminate outside the zone, which often filters out "fakeouts."

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