In practice
Displacement is how traders tell a move with real orders behind it from ordinary drift. Several large candles in one direction, closing near their extremes, show that one side was willing to pay up to get filled.
It gives weight to whatever it creates: the structure break is more trustworthy, and the gaps and order blocks it leaves behind become the areas to trade from on a pullback.
What to watch for
Displacement is judged against the candles around it, so the same move can be strong in a quiet session and ordinary in a busy one. Spikes caused by news can look like displacement and reverse completely.
Related terms
3 terms- Fair value gapFVGA three-candle gap where candle 1's wick and candle 3's wick don't overlap, left by a fast move.
- Market structure shiftMSSICT's stricter change of character: a break against the trend that comes with displacement, often right after a liquidity sweep.
- ImpulseA fast move in the direction of the trend, with big candles covering a lot of ground.