IFVG meaning: what is an inverse fair value gap?

What an inverse fair value gap is

A fair value gap (FVG) is the range between candle 1's wick and candle 3's wick in a fast three-candle move. Smart money traders expect price to come back to it and react in the direction of the original move. Often it does. Sometimes price comes back and keeps going straight through.

When a candle body closes beyond the far side of the gap, that gap has failed as support or resistance. The inverse fair value gap idea, popularised in ICT teaching, says the failed gap is still meaningful: traders who bought inside a bullish gap are now losing, and if price returns to their entry area they may sell to get out flat. So the zone can turn from a floor into a ceiling.

That explanation is a plausible story, not something a chart can prove. What you can check is the behaviour: in your own backtests, how often does price react at a broken gap compared with a random level? That is the honest test of whether IFVGs are useful to you.

How to identify an IFVG, step by step

1. Find a valid FVG first. Mark the gap between candle 1's high and candle 3's low (bullish) or candle 1's low and candle 3's high (bearish).
2. Wait for a body close through it. For a bullish gap, a candle must close below the gap's lower edge. A wick below that closes back inside does not count.
3. Relabel the box. The same prices are now a bearish IFVG. Extend it forward.
4. Watch the return. A rally back into the box from below that stalls and closes back under it is the IFVG doing its new job.
5. Know when it is finished. A close back above the top of the box cancels the inverse reading.

In the chart above, a bullish gap forms between 1.0824 and 1.0838. Hours later a large bearish candle closes at 1.0812, well below it. When price rallies back to 1.0833, inside the old gap, the zone holds from below and the decline resumes.

FVG vs IFVG: the difference

The relationship is the same as the one between an order block and a breaker block: a zone that fails is not thrown away, it is read from the other side.

Common mistakes

• Inverting on a wick. Price often dips through a gap and closes back inside it. That is the FVG holding, not failing.
• Inverting tiny gaps. A gap a few pips wide on a 1-minute chart carries little meaning either way.
• Ignoring context. An IFVG that agrees with a fresh change of character is a stronger idea than one that fights the higher-timeframe trend.
• Holding on after it breaks again. If price closes back through the IFVG, the zone has now failed twice. Stop using it.

How IFVGs fit into entry and stop rules is covered in the fair value gap trading strategy.