Implied Fair Value Gap — The Hidden Gap You Can't See on the Chart

The classic Fair Value Gap has one big advantage: you can see it with the naked eye. But the market doesn't always leave inefficiency in such a readable form. Sometimes displacement is just as violent, the middle candle just as dominant — and yet no gap prints on the chart, because the wicks of the neighboring candles "paper over" the empty space. ICT has a separate concept for this situation: the Implied FVG, a hidden gap — a concealed zone defined not by wick extremes but by their midpoints. In this article we show how to find it, how it differs from a classic FVG and from an inversion, and how to build an entry around it on BTC and ETH.

What Is an Implied FVG

An Implied FVG (implied fair value gap) is an inefficiency zone invisible to the naked eye, inside a three-candle displacement formation where the wicks of the candles neighboring the large middle candle overlap its body — which means no classic gap prints.

Quick recap: in a classic FVG, the formation's middle candle is so dynamic that empty space is left between the wick of the first candle and the wick of the third. The condition: the wicks don't touch. The Implied FVG describes a situation where displacement was real — a large candle with a dominant body — but the wicks of candles 1 and 3 are long enough to overlap that body. Formally, there's no gap. But the inefficiency is still there: the market flew through that area one-sidedly, and the long wicks only partially "traded" it.

Where exactly does the hidden zone sit? This is where consequent encroachment (CE) comes in — the midpoint of a wick's range. The Implied FVG stretches between the CE of the first candle's wick and the CE of the third candle's wick. The logic: a wick is an area where trading happened only partially — its midpoint is the conventional boundary between the "traded" part and the empty one. The area between the midpoints of both wicks is exactly the implied gap, which the price delivery algorithm treats like any other inefficiency.

Two variants:

Bullish Implied FVG — a large bullish candle whose body is overlapped by the upper wick of the preceding candle and the lower wick of the following candle. The zone sits between the CE of candle 1's upper wick and the CE of candle 3's lower wick. It acts as hidden support.

Bearish Implied FVG — a large bearish candle; the zone sits between the CE of candle 1's lower wick and the CE of candle 3's upper wick. It acts as hidden resistance.

A terminology note that will save you a lot of confusion: the abbreviation "IFVG" gets used for both implied FVG and inversion FVG — and these are completely different concepts. Implied is a hidden gap in a formation with overlapping wicks. Inversion is a classic gap that got broken through and flipped polarity. Always check the context to see which one is meant.

How to Identify an Implied FVG Step by Step

Since the gap isn't visible, you look for it indirectly — via the displacement candle:

1. Find a large candle with a dominant body. Same as with a classic FVG: the formation's carrier is the middle candle, the result of a violent, one-sided move.
2. Check whether a classic gap exists. If there's empty space between the wick of candle 1 and the wick of candle 3, you have a regular FVG and don't need this article. Implied only comes into play when the wicks overlap the body of the middle candle.
3. Verify both wicks. For the bullish version: candle 1 must have an upper wick, candle 3 a lower wick, and both must overlap the large candle's body. Without this setup there's nothing to measure.
4. Measure the CE of the first wick. Using a Fibonacci tool (or a simple line), find the midpoint of candle 1's upper wick — from its high down to the start (the body's upper edge).
5. Measure the CE of the second wick. Same process, for the midpoint of candle 3's lower wick.
6. Outline the zone between the two CE levels. That's your Implied FVG. Extend it to the right — it works exactly like a regular gap: waiting for price to return.

The most common technical mistake at this stage is measuring the wrong wicks. For the bullish formation, what counts is the first candle's upper wick and the third candle's lower wick (reversed for the bearish version). Mixing up the wicks shifts the entire zone to the wrong spot. Our SRL indicator draws classic, visible gaps on the chart automatically — so if displacement is present and the indicator hasn't marked a zone, that's your cue to check the wick arrangement for an implied gap.

How to Trade an Implied FVG

The trade flow is analogous to a classic gap — with extra emphasis on context, because the zone is more subtle:

Step 1 — higher-timeframe trend. Daily/H4: higher highs and lows — you're looking for bullish zones; lower ones — bearish zones. An Implied FVG against structure is a low-quality bet.

Step 2 — higher-timeframe level and structure shift. The best implied gaps form in the displacement leg after price has reacted to a significant PD Array (an Order Block, an H4/daily FVG) and shifted structure on the lower timeframe. That places the zone inside a concrete narrative instead of a random spot on the chart.

Step 3 — identify and mark the zone. The displacement candle, wick verification, two CE levels — the procedure from the previous section.

Step 4 — wait for the return. As with any gap: you don't chase the move. Price needs to return to the area between the CE levels on its own.

Step 5 — entry. Classic approach: a reaction inside the zone, entry near its middle, optionally with confirmation on M5/M1 (a structure shift, a clear rejection). You buy a bullish Implied FVG and sell a bearish one.

Step 6 — stop and target. Conservative stop: behind the opposite edge of the zone, with a buffer. Tighter stop: behind the extreme of the displacement candle. Target: the nearest liquidity pool in the trade's direction — an old high/low, equal extremes, or an unfilled higher-timeframe gap.

Example: after reacting to a daily Order Block, ETH breaks H1 structure and drops on a large M15 candle, but no gap prints — the neighboring wicks paper over the body. You measure the CE of the preceding candle's lower wick and the following candle's upper wick, and mark the narrow zone between them. Two hours later the correction returns exactly to that area — a spot where the crowd sees "nothing" — price prints a rejection on M5 and slides down to the lows. Entry in the zone, stop above the high of the displacement candle, target on the liquidity below the last low.

Implied FVG vs Classic FVG vs Inversion FVG

A quick cheat sheet, because these three concepts get mixed up constantly. Classic FVG: the wicks of candles 1 and 3 don't touch, the gap is visible, you measure off the wick extremes (full guide here). Implied FVG: the wicks overlap the middle candle's body, the gap isn't visible, you measure between the midpoints (CE) of both wicks. Inversion FVG: any classic gap that price broke through with a body close — the zone flips polarity and gets traded in the opposite direction. In other words: classic and implied differ in the visibility of the same inefficiency, while inversion differs in role — it's a gap after a change of sides. We cover the directional naming (BISI/SIBI) separately in the article on SIBI and BISI.

Common Mistakes

• Measuring the wrong wicks. Bullish version: candle 1's upper wick and candle 3's lower wick. Reversing this setup places the zone in the wrong spot — the most common technical mistake with this formation.
• Marking implied where there's actually a regular gap. If there's space between the wicks, it's a classic FVG measured off the extremes. Implied applies only to setups with overlapping wicks.
• Confusing implied with inversion. Same abbreviation, different concepts, often opposite trade directions. Before you enter, make sure which "IFVG" you've actually marked.
• Trading the zone without context. An implied gap in the middle of consolidation, with no HTF level or structure shift behind it, has poor statistics. A subtle zone needs strong backing.
• Stop at the CE level. Wick midpoints are natural targets for the second test. The stop belongs behind the opposite edge of the zone or the extreme of the displacement candle.
• Entering a zone built on a news candle before the market settles. Displacement from major macro data can be reversed entirely — let the market finish its reaction before you trade the retest.

The Implied FVG is a concept for traders who've already mastered the classic gap and want to see more than the crowd. Its strength comes precisely from its invisibility: in a zone nobody has marked, there's no crowd's tight stops and no premature entries — just institutional inefficiency waiting to be rebalanced. Before adding it to your arsenal, make sure you can measure consequent encroachment confidently and can tell strong gaps from weak ones — then go find five displacements without a visible gap on BTC's history and check how price behaved between the wick midpoints. The results of that simple homework speak for themselves.

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Rafał — Krypto Bez Ściemy

Trader and founder of Strefa Tradingu. He’s been breaking crypto down on YouTube for years — no hype, no signals, with a focus on market structure and risk management.

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