What is Fair Value Gap (FVG & IFVG)?
A Fair Value Gap (FVG) is a three-candle price delivery imbalance where aggressive institutional order flow moves price so rapidly that candle 1's high and candle 3's low (in a bullish move) do not overlap, leaving a single-sided liquidity void that price frequently revisits to rebalance.
Mathematical Calculation
A bullish Fair Value Gap exists whenever the low of candle t remains strictly above the high of candle t-2. The midpoint (50% level) of this gap is known as Consequent Encroachment (CE).
Real-World Numerical Simulation
Backtesting an NQ 5-Minute Bullish FVG With LogToLab (Ctrl+C)
Candle 1 (9:35 AM): NQ prints a high at 20,100.00.
Candle 2 (9:40 AM): Displacement impulse surges to 20,145.00.
Candle 3 (9:45 AM): Pullback low holds at 20,120.00, leaving a 20-point Bullish FVG [20,100.00 – 20,120.00].
Ctrl+C Capture: Place a Long Position tool at the 50% midpoint (20,110.00) on TradingView and press Ctrl+C. LogToLab automatically extracts Entry, SL, TP, R:R, outcome, and chart screenshots into your Backtest Lab!
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Institutional Comparison Matrix
| Pattern Type | Structural Condition | Primary Use Case | Invalidation Trigger |
|---|---|---|---|
| Bullish FVG (BISI) | Candle 3 Low > Candle 1 High | Long continuation retracement entry | 5m/15m candle body closes below Candle 1 High |
| Bearish FVG (SIBI) | Candle 3 High < Candle 1 Low | Short continuation retracement entry | 5m/15m candle body closes above Candle 1 Low |
| Inverse FVG (IFVG) | Disrespected FVG flips polarity | Reversal confirmation after liquidity sweep | Candle closes back inside original FVG range |
Monitored Prop Firms Applying This Rule
Frequently Asked Questions
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