Fair Value Gaps & Order BlocksAdvanced

Inverse Fair Value Gap (IFVG)

What an inverse fair value gap (IFVG) is: a fair value gap that price closes through and then respects from the other side, with rules and invalidation.

Library categories

What it means

An inverse fair value gap is a fair value gap that failed. Price closed through it instead of reacting, and the same zone then acts in the opposite direction: a failed bullish gap becomes resistance, a failed bearish gap becomes support.

It is the gap version of "support becomes resistance".

Why traders use it

A gap that is closed through with a full candle body shows the side that created it lost control. Traders then watch the zone for a retest from the other side.

Many traders use IFVGs as confirmation of a market structure shift.

Chart examples

Bullish gap fails, becomes bearish IFVG

Closed throughRejectedBullish FVGIFVG
Price closes below the bullish gap, then rallies back into it and is rejected: the zone now acts as resistance.Schematic diagrams drawn to explain the idea; they are not market data.

How to identify it objectively

  • 1Mark a fair value gap (candle 1 high to candle 3 low for a bullish gap).
  • 2Wait for a candle to close beyond the far side of the gap (below a bullish gap).
  • 3The zone is now an IFVG with the opposite role.
  • 4Watch for a retest into the zone and a rejection close.

Bullish use

  • 1A bearish FVG is closed through upward.
  • 2Price retests the zone from above.
  • 3A bullish rejection close confirms the IFVG as support.

Bearish use

  • 1A bullish FVG is closed through downward.
  • 2Price retests the zone from below.
  • 3A bearish rejection close confirms the IFVG as resistance.

What confirms it

  • A full candle close through the original gap.
  • A rejection on the retest.
  • The direction agrees with structure.

What invalidates it

  • Price closes back through the IFVG in the original direction.
  • The "close through" was only a wick.

How a hypothetical setup is built

Entry

On the retest of the IFVG with a rejection close.

Stop

Beyond the far side of the IFVG.

Target

The next liquidity pool in the new direction.

A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.

Historical testing

Not tested on The Tradeskill yet.

Limitations: when it fails

  • Gaps are often partly filled several times; deciding when it "failed" needs a strict close rule.
  • Small gaps on low timeframes are noise.
  • The retest may not come.

Knowledge check

Pick an answer to see the explanation. Nothing is saved.

What turns a bullish FVG into a bearish IFVG?

1. What turns a bullish FVG into a bearish IFVG?

After that, how is the zone used?

2. After that, how is the zone used?

What invalidates the IFVG?

3. What invalidates the IFVG?

Practise it risk-free

Open the free chart, use replay to go back in time and look for this concept candle by candle with $20,000 in virtual money.