Displacement
Displacement is a strong, fast move in one direction, usually a large candle body, that leaves little overlap with the candles around it.
Definition
Displacement is a strong, fast move in one direction, usually a large candle body, that leaves little overlap with the candles around it.
A fair value gap often sits inside a displacement because the middle candle of the three is large. The rule does not require it: a gap can form from a small middle candle too.
This site measures displacement as the body of candle 2 relative to the instrument's average range, and shows it beside a gap. It is a description of the move, and it is never scored as a sign that a gap is good.
There is no agreed size at which a move counts as displacement. Each educator draws the line differently.
On a real chart
- 1Bearish4013.64 to 4014.76formed 08:15 UTCTraded through at 08:15 UTC
- 2Bullish4019.16 to 4020.95formed 09:00 UTCTraded through at 13:45 UTC
- 3Bearish4008.84 to 4015.99formed 14:30 UTCNot revisited by 18:00 UTC
- 4Bearish4001.38 to 4007.13formed 14:45 UTCRe-entered at 14:45 UTC, not traded through
- 5Bullish3999.26 to 4001.34formed 16:15 UTCTraded through at 16:30 UTC
- 6Bearish3997.16 to 3998.82formed 17:30 UTCTraded through at 17:45 UTC
Gold (XAUUSD), 23 October 2026, 15 minute candles, 06:00 to 18:00 UTC. The rule finds 6 gaps in this window. A bearish gap whose third candle opens at 14:15 UTC runs from 4008.84 to 4015.99, a size of 7.15 in price. By the end of the chart price had not traded back into it, so it is open.
The window was chosen because it shows the term clearly. It is one chart, and it says nothing about what the next gap will do.