Displacement

Displacement refers to a single candle or short sequence of candles whose range exceeds recent volatility by a meaningful margin, typically 1.5× to 2× the 20-candle Average True Range. Displacement signals that aggressive orders have entered the market, overwhelming passive order flow.

The term is central to ICT methodology because displacement is what creates Fair Value Gaps, the faster price moves, the more likely it leaves inefficient zones behind. Entries based on retests of displacement typically target the 50% level of the displacement candle or the FVG it created. Without observed displacement, FVG-based entries lose edge because there's no evidence of institutional commitment; practitioners skip setups that form on low-conviction, overlapping candles even if a gap technically exists.