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
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.
Related concepts
- Fair Value Gaps & Order BlocksBalanced Price Range (BPR)
- Fair Value Gaps & Order BlocksBreaker Block
- Market StructureMarket Structure Shift (MSS)
- Full guide on The TradeskillFair Value Gap (FVG) Explained
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
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