Inversion fair value gap: what it means
An inversion fair value gap, or inverse FVG, is an old gap that price has closed through and that some traders then read as a zone of the opposite direction.
The idea in three steps
- A fair value gap forms. Take a bullish one: the range between the high of candle 1 and the low of candle 3.
- A later candle closes beyond the far edge. For a bullish gap that is a close below its bottom.
- The old box is not dropped. Traders who use inversions read it as a bearish zone, a place price may come back up to and turn down from.
A bearish gap inverts the other way: a close above its top turns it into a bullish zone.
How this differs from a filled gap
On this site, a gap is filled when a later candle trades through its far edge, even by a wick. That describes what price did. An inversion asks for more. Many descriptions need a candle to close beyond the edge, not only touch it.
A filled gap is often called used up. An inversion keeps the same box and gives it a new job. The pattern is a reading of the chart, and the same candles can be read as a filled gap and as an inversion.
Where educators differ
- What counts as closing through: a body close beyond the edge, a close beyond the midpoint, or a wick.
- Whether the first return to the old box counts, or only the first after the close.
- Whether the timeframe of the close must match the timeframe of the gap.
- The name: inverse FVG, inversion FVG and IFVG are used for the same idea.
This site has not tested how often an inverted box holds and gives no rate. Treat the idea as a way to organise a chart. It is not a signal.
This page defines the idea only. The other half, how plain gaps are found, is in the guide. The risk side is on how traders use the zone.