Introduction
Displacement is one of the most important factors in evaluating trade setups. It tells the story of whether price is ready to move with strength or stuck in indecision. Recognizing true displacement versus weak price action can be the difference between taking a high-probability trade and sitting on your hands.
What Is Displacement?
Displacement occurs when price aggressively breaks through swing highs or swing lows, closing candles beyond them with speed. ICT often said: “Wicks do the damage, bodies tell the story.” This means you want to see candle bodies closing beyond prior levels, not just wicks tapping them.
A clean example: price closes below a swing low, retests a breaker, then continues lower.
Another good sign: consecutive fair value gaps (FVGs) forming during strong moves.
These are the kinds of conditions that provide clarity and structure for execution.
When Displacement Is Lacking
If price chops sideways, failing to close beyond highs or lows, displacement is missing. This usually happens after:
London runs both Asia highs and lows – a classic low probability profile.
Higher timeframe draw liquidity already hit – price often consolidates to catch its breath.
In these moments, setups may exist but they’re weaker. Traders should reduce risk, wait longer for confirmation, or avoid trading entirely.
Why Displacement Matters
Confirms Market Intent – A close beyond key levels shows momentum and validates direction.
Creates Points of Interest – Fair value gaps left behind become internal range liquidity for potential entries.
Filters Out Noise – Without displacement, entries are just guesses in chop.
Practical Example
During a high-probability session (like New York open), you might see multiple FVGs form within an hour as price drives strongly.
In contrast, during low-probability conditions, you may see only a handful of gaps across several hours—clear evidence of indecision.
This difference helps you quickly assess whether the environment favors strong setups or demands patience.
Final Thoughts
Displacement is a filter. If you don’t see it, don’t force trades. If you do see it, combine it with your entry model and other criteria for a high-probability setup. Always remember—when price is displacing, the market is showing its hand.