You met the fair value gap (FVG) in Module 5: a three-candle pattern where candle 1 and candle 3 leave a gap beside a large candle 2. ICT treats FVGs as one of the most important tools in the framework, with its own vocabulary and a few extra rules.
ICT's FVG vocabulary
| Term | Meaning |
|---|---|
| BISI | Buy-side imbalance, sell-side inefficiency: a bullish FVG (price moved up fast, sellers were barely filled) |
| SIBI | Sell-side imbalance, buy-side inefficiency: a bearish FVG |
| Consequent encroachment (CE) | The 50% level of the gap |
| Inversion FVG (IFVG) | An FVG that price closed through, which then acts as a zone in the opposite direction |
Trading the fill
In a bullish context, ICT traders look for price to return into a bullish FVG and react, often from the consequent encroachment. A common rule: price can trade into the gap and wick through CE, but a candle body closing below the bottom of the gap means the FVG has failed.
Inversion FVGs
When price closes straight through a bullish FVG, the gap has failed. ICT traders then watch it as an inversion FVG: if price comes back up into it, it often acts as resistance. A bearish FVG that price closes above can likewise invert into support. It's the same role-reversal logic as broken support and resistance, and breaker blocks.
Worked example
A bullish FVG on the 5-minute Nasdaq chart runs from 18,420 (top of candle 1) to 18,440 (bottom of candle 3). CE = 18,430.
A long from 18,436 with a stop at 18,414, below the gap, risks 22 points. If a 5-minute candle closes at 18,405 instead, the FVG has failed; watch 18,420–18,440 as potential resistance.
Key takeaways
- ICT calls a bullish FVG a BISI and a bearish FVG a SIBI; the 50% level is consequent encroachment.
- Price often reacts from inside the gap; a body close beyond the far side means the FVG has failed.
- A failed FVG can become an inversion FVG, acting as a zone in the opposite direction.
- Favour FVGs created by displacement that broke structure, in premium or discount.