ICT Inversion Fair Value Gap – Advanced FVG Concept

In Financial Markets, inversion is a concept used in market analysis where price shifts its momentum or direction. Understanding ICT Inversion Fair Value Gap required deep understanding of ICT Fair Value Gap. IFVG combines the ideas of FVG and market inversion.

This article focuses on core concept of Inversion Fair Value Gap, its identification in Bullish and Bearish Market, and its usage in ICT trading.

Understanding ICT Inversion Fair Value Gap

Also referred to as Inverse FVG. It is a concept in ICT trading methodology that highlights a crucial shift in price momentum. It is also known as a failed FVG. A normal FVG act as a zone of supply and demand zone to sustain price movement. An inversion FVG forms when price fails to respect the FVG and breaks through it. This failure signifies a potential weakening of the existing trend, often marks the earliest sign of a momentum shift.

The inverse FVG is a vital tool for traders to identify earliest signs of momentum shifts. It signifies that the previous trend is weakening. Remember, it cannot be used as a complete trend reversal. However, it can be used to point to the areas where they should reconsider their directional bias. During a strong trend, FVG act as a retracement zone. If price violates an FVG, this signals a disruption in the trend’s momentum.

The inversion fair value gap is a key zone where trader should observe price action. These are the areas where traders can identify short-term retracement opportunities. Monitor price action for a Break of structure or Change of character that confirms a new trend and directional bias. It can be used to exit previous trading positions.

ICT Bullish Inversion Fair Value Gap (IFVG)

A Bullish IFVG is a concept in ICT trading where price invalidates a bearish Fair Value Gap by closing price above it. This is used as primary sign of shift in market sentiment. It signals weakening of selling pressure and a potential transition to bullish momentum.

Formation and Identification

Identification of IFVG starts with identifying and locating a bearish FVG in a strong downward price move. In the bearish FVG, sellers dominate and price is expected to react and continue downward. However, the games changes when price decisively closes above this bearish FVG instead of respecting it. This gap of Bearish FVG transform into a Bullish Inverse Fair Value Gap.

This shift represents the market failure to sustain momentum. The Bullish IFVG now act as support zones and signals the possibility of further upward movement. Traders can use this level as a base for potential bullish entries.

Trading with Bullish IFVG

Trading with a Bullish IFVG involves capitalizing on trend shift. Opportunities arises when market breaks previous bearish FVG and close above it. This violation of Bearish FVG signals the weakening of selling pressure and potential for bullish move. The following are the steps to take in trading with Bullish IFVG:

• Identification of Bearish Fair Value Gap in a Price move.
• Violation of Bearish FVG and price close above it.
• Wait for a pullback to the consequent encroachment (midpoint of the gap).
• Set your stoploss below the IFVG and target the next liquidity pool.

By trading the Bullish IFVG, ICT trader aim to enter the market at a confirmed support level after the bearish momentum has been invalidated. This can offer a high-probability bullish trade setup.

ICT Bearish Inversion Fair Value Gap (IFVG)

A Bearish IFVG is a concept in ICT trading where price invalidates a bullish Fair Value Gap by closing price below it. This is used as primary sign of shift in market sentiment. It signals weakening of buying pressure and a potential transition to bearish momentum.

Formation and Identification

Identification of bearish IFVG starts with identifying and locating a bullish FVG in a strong upward price move. In the bullish FVG, buyers dominate and price is expected to react and continue upward. However, the games changes when price decisively closes below this bullish FVG instead of respecting it. This gap of bullish FVG transform into a Bearish Inverse Fair Value Gap.

This shift represents the market failure to sustain momentum. The Bearish IFVG now act as resistance zones and signals the possibility of further downward movement. Traders can use this level as a base for potential sell entries.

Trading with Bearish IFVG

Trading with a Bearish IFVG involves capitalizing on trend shift. Opportunities arises when market breaks previous bullish FVG and close below it. This violation of bullish FVG signals the weakening of buying pressure and potential for bearish move. The following are the steps to take in trading with bearish IFVG:

• Identification of bullish Fair Value Gap in a Price move.
• Violation of bullish FVG and price close above it.
• Wait for a pullback to the consequent encroachment (midpoint of the gap).
• Set your stoploss above the IFVG and target the next liquidity pool.

By trading the bearish IFVG, ICT trader aim to enter the market at a confirmed resistance level after the bullish momentum has been invalidated. This can offer a high-probability bearish trade setup.

Final Note

In ICT Trading, inversion Fair Value Gap offers high-probability trade setups. It is combined with other ICT tools and techniques for better trade entry. That is the reason IFVG requires deep understanding of price action, market action and risk management. It is advised to use proper stop-loss and avoid over-leveraging.

Trading in financial markets carry risk. Do not use your capital without getting proper education. This information is for educational purpose and not financial advice. Test your strategies on live chart or consult financial advisor for investing. Lastly, it is advised not to trade with funds that you cannot afford to lose.

FAQs