Displacement

Definition

Displacement in ICT methodology is a fast, momentum-driven price move (typically 3+ consecutive same-direction candles with above-average range) that signals strong institutional intent. Displacement is what creates order blocks (the last opposite-direction candle before the displacement) and fair value gaps (the imbalance candles within the displacement). ICT practitioners use displacement as confirmation that the trading direction has institutional backing. Displacement detection in EAs is straightforward: measure candle-range deviation from rolling average, confirm directional consistency across N consecutive candles. The challenge is configuring the threshold parameters without overfitting to backtest noise.