Inversion Fair Value Gap Signals

The Inversion Fair Value Gap Signals indicator is a specialized tool designed to detect, track, and visualize fair value gaps (FVGs) and their subsequent inversions. It helps traders identify institutional order flow imbalances and provides context for potential support and resistance flips when initial gaps are mitigated.

Usage

Apply the indicator to your chart to automatically highlight bullish and bearish inefficiencies.

• Bullish FVGs: Formed when price moves rapidly upward, leaving a gap between the prior high and current low. These act as potential demand zones.
• Bearish FVGs: Formed when price moves rapidly downward, leaving a gap between the prior low and current high. These act as potential supply zones.
• Inversion Logic: When a gap is filled (mitigated) by a candle close, it flips into an Inversion Fair Value Gap (IFVG). A bullish FVG becomes a bearish IFVG resistance zone, and a bearish FVG becomes a bullish IFVG support zone.
• Volume Analysis: The indicator displays up/down volume data inside the zones, allowing you to gauge the level of participation during the gap's formation.
• Rejection Markers: Triangle icons (△/▽ for FVGs, ▲/▼ for IFVGs) appear when price enters a zone and exits without mitigating it, signaling strong trend momentum or rejection.

Details

The script utilizes Smart Money Concepts (SMC) to identify three-bar sequences that create price imbalances. It includes a volatility filter based on a 150-period ATR to ensure only significant gaps are plotted. To maintain chart clarity, the "Prevent Overlap" feature discards new gaps that fall within existing unfinished zones. Gaps are managed through arrays, ensuring they extend until they are mitigated by price, reach the expiration bar limit, or transform into an inversion zone.

Settings

FVG Detection

• Zone Expiration Bars: Sets the maximum number of bars a gap will extend to the right before being removed.
• Lower Timeframe Value: The timeframe used to calculate the intrinsic buying and selling volume displayed in the zones.
• Prevent Overlap: When enabled, prevents the creation of new gaps that overlap with existing unfinished zones.
• Show Bullish/Bearish FVGs: Toggles the detection and visibility of specific gap types.

Appearance

• Show Main Gap Zone: Renders the colored rectangle for the price gap.
• Volume Text Size: Adjusts the size of the volume data displayed in the corner of the zones.
• Bullish/Bearish Color: Customizes the colors used for bullish and bearish sentiment.

FAQ

How do I interpret the triangle markers?

The hollow triangles (△/▽) indicate a rejection of a standard FVG, while solid triangles (▲/▼) indicate a rejection of an Inversion FVG. These suggest that price touched the zone but exited it without closing through the mitigation level.

What is the benefit of the Inversion logic?

Standard FVGs are often viewed only as targets; however, once price closes through them, they often act as "polarity flips." This means an area of former buying pressure often becomes an area of selling pressure (and vice versa), offering refined entry points for reversals.

How can I access Inversion Fair Value Gap Signals?

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