Inversion Fair Value Gap (IFVG)
An Inversion Fair Value Gap (IFVG) is a Fair Value Gap (FVG) that has been **invalidated** by price and subsequently **flips its role**. In an IFVG, price breaks through a previously valid FVG zone and on return to that zone, the gap can act as supply/resistance or demand/support from the opposite side. This concept often appears at shifts in momentum, and reflects a transition in market pressure.
Definition
An IFVG is a previously formed fair value gap (an imbalance created by rapid price movement) that is **violated by price beyond its boundary** (usually by close). This invalidation signals a weakening of the FVG’s original role and often causes the zone to flip: - A bullish FVG broken below may flip to **act as resistance**. - A bearish FVG broken above may flip to **act as support**. The inverted gap zone can then react to price upon re-testing.
Why It Matters
IFVGs signal important momentum shifts and can offer additional confluence zones for entries when trading with Smart Money Concepts. They help traders identify areas where imbalance has failed and price is potentially repositioning to resume in the opposite direction or continue broader structure.
How to Identify
- Identify a *valid* Fair Value Gap (FVG) based on 3-candle imbalance rules (no overlap between candles 1 and 3).
- Wait for price to **close beyond the FVG** boundary, invalidating the original gap.
- Mark the originally-formed gap zone as an IFVG once invalidated.
- Watch for price to revisit the zone from the **opposite side** of the original direction.
- Look for reactions (rejection, wicks, confirmations) around the IFVG area before entering.
How to Trade
- Use IFVG rejection as an entry signal in alignment with structure and liquidity context.
- Place stops beyond the IFVG boundary that was violated.
- Prefer IFVGs that occur near larger liquidity clusters (e.g., sessions, swing points).
- Combine IFVG usage with market structure breaks (BOS/CHOCH) for stronger confluence.
- Avoid entering solely on the return without confirmation (rejection, confluence).
Common Confusions
An IFVG only forms once price **closes beyond the FVG**, not just wicks touching it.
Only return with **reaction and structure context** validates a trade — price must react at the zone with signals.
IFVGs indicate momentum shifts or significant structure changes — they don’t guarantee reversals without confluence such as BOS/CHOCH or trend context.
Pre-Trade Checklist
- Clear FVG identified (3-candle gap)?
- Did price CLOSE through the FVG (failure confirmed)?
- Has price returned to retest the same zone?
- Is there a clean rejection at the zone (wick + close away)?
- Is timing aligned with London/NY session?
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Educational resource only. Not financial advice. Trading involves substantial risk of loss.