Consumption Inverse Fair Value Gaps

The Consumption Inverse Fair Value Gaps indicator identifies and tracks the consumption of inverted fair value gaps (IFVGs) by measuring how much of a previously invalidated FVG zone has been filled by market orders. This tool helps traders visualize the transition of support and resistance zones through the percentage-based filling of price imbalances.

Usage

The indicator can be used to identify key areas of market interest where liquidity has been tapped.

• IFVG Identification: When a bullish FVG is breached by a closing price or wick (depending on settings), it becomes a bearish IFVG, and vice versa.
• Consumption Tracking: The script renders the "consumed" part of these zones as price moves through them. A percentage label indicates how much of the original gap has been mitigated.
• Clean Charting: Use the "Combine Zones" feature to merge overlapping FVG areas into a single unified zone, reducing chart clutter and highlighting areas of significant imbalance.

Details

Inversion Fair Value Gaps occur when price returns to a previously formed imbalance and trades through it, effectively flipping the bias of the zone. This indicator specifically focuses on the "consumption" of these zones, providing a visual representation of how much liquidity remains within the gap. It calculates consumption based on either wick or close interactions, allowing for flexibility based on different trading styles (e.g., SMC, ICT).

Settings

• Zone Invalidation: Determines if an FVG is invalidated by a Wick or Close price.
• IFVG Zone Invalidation: Determines the criteria for invalidating the subsequent Inversion FVG and calculating consumption.
• Zone Filtering: Choose between "Average Range" (compares FVG size to recent bar ranges) or "Volume Threshold" (filters based on volume relative to an average).
• FVG Detection: Choose "Same Type" to require all three bars in the formation to be the same direction, or "All" for mixed bar types.
• Detection Sensitivity: Adjusts the size of gaps detected, ranging from Low (larger gaps) to Extreme (all gaps).
• Show Historic Zones: Toggles the visibility of invalidated IFVG zones.

FAQ

How do I interpret the consumption percentage? The percentage represents how much of the vertical price range of the IFVG has been entered by subsequent price action. A 100% consumption means the gap is fully filled.

Can I use this for volume-based analysis? Yes, the indicator includes a "Volume Threshold" filter to prioritize fair value gaps that occur with high relative volume.

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