Model IFVG: Trading Reversals with Inversion FVGs
When a fair value gap (FVG) is formed but is penetrated by price easily and closes on the other side, it becomes Inversion FVG (IFVG). The real-life IFVG model takes advantage of this role reversal to keep up with emerging trends.
1. IFVG's State Transition Mechanism
The IPDA algorithm considers the broken old FVG as an old imbalanced region that has been absorbed. When Smart Money changes their Bias, they will use this old FVG as a platform (new Support/Resistance) to push the price forward:
- One Bullish FVG (Support) is broken from the top down, the role will be reversed Strong resistance (Bearish IFVG).
- One Bearish FVG (Resistance) broken from the bottom up will reverse the role Strong support (Bullish IFVG).
2. Steps to Set Up a Trade
📷 Figure 17.1: Set up a real trade with Inversion FVG (IFVG) on the 5-minute Nasdaq chart. After the price swept liquidity (SMT) at the large frame POI, there was a sharp break straight through the previous falling FVG zone. This decrease in FVG immediately reverses its role as new IFVG support, creating an opportunity for a safe Buy order when the price returns to retest.
Step 1: Determine a clear FVG on the trading timeframe.
Step 2: Wait for the price to penetrate this FVG with a candle that closes completely on the other side of the FVG zone.
Step 3: Place a Limit order at the boundary or 50% point (Consequent Encroachment) of the old FVG when the price retests.
Step 4: Place stop loss (SL) just outside the initial breakout candle area.
Trade disciplined and trade well! If you have any questions about this lesson, join our Telegram community to discuss.
← View more lessons