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Displacement Continuationrange and body, nothing else

Evidence: ModerateIntermediateMomentum · Price Action

Displacement is a candle with a large body and small wicks. Two mechanical gates define it: range > 1.5 × the average range of the prior twelve bars, and body ≥ 70% of that candle's range.

The trade is a shallow pullback that holds above the displacement candle's midpoint, entered on the resumption.

There is no zone, no gap and no fair value gap here. The reference is a single measurable line — the midpoint of the displacement candle. That is deliberate.

Category
Momentum · Price Action
Timeframe
M5 primary · M15 secondary
Suitable pairs
GBPUSD · EURUSD · USDJPY · XAUUSD
Session
London and New York — displacement needs genuine flow behind it
Indicators / tools
Bar range against the twelve-bar average · ATR(14). No oscillators, no zones.

Valid setup

S19 · DISPLACEMENT CONTINUATION — VALID SETUP GBPUSD · M5 · measured against recent average range — no zone, no gap, just the candle and what follows LONG 1.25949 1.26026 1.26102 1.26178 1.26254 1.26331 1.26407 DISPLACEMENT MIDPOINT — the line the pullback must hold ENTRY on the resumption close SL below the midpoint +2R reference 1R +2R 1 2 3 4 5 6 ① Balanced consolidation — bar ranges sit on their average ② DISPLACEMENT: range is 2.9× the prior 12-bar average AND the body is 90% of that range. Both gates, or no setup. Small wicks mean the move was not contested. ③ Shallow pullback that holds ABOVE the displacement midpoint ④ Resumption candle ⑤ ENTRY on its close ⑥ Continuation. Note there is no zone drawn anywhere here — the midpoint is the only reference, and it is measurable. 1.26107 1.26046 1.26019 1.26016 displacement shallow pullback Bar range vs its own 12-bar average — the displacement is 2.9× avg 12

Exact rules

Entry

  • On every bar compute: range = high − low; avg = the average range of the prior twelve bars; body = the absolute difference between close and open.
  • Displacement: range > 1.5 × avg and body ≥ 0.70 × range.
  • Midpoint = (high + low) ÷ 2 of that candle. This is your reference line.
  • Pullback: price comes back, but no candle closes below the midpoint — for a bullish displacement.
  • Trigger: a candle that closes above the pullback high. Enter at its close, or at the next bar's open.

Stop loss

  • 0.15 × ATR(14) below the midpoint.
  • The logic: a close below the midpoint means the whole upper half of the displacement candle has been rejected.
  • Risk 0.5%–1%.

Take profit / exit

  • The next structural reference — the previous swing high.
  • A minimum of 1:2, measured before you enter.
  • Measured-move variant, tested separately: project the displacement candle's range from the entry.

Build Displacement Continuation

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Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.