Displacement and Market Structure Shift (MSS) in ICT
Displacement is a strong, one-sided move made of large candles that closes far from where it started. A market structure shift (MSS) is a break of the most recent swing against the prevailing trend, made with displacement, usually right after a liquidity sweep. Together they are ICT’s confirmation that the direction may have changed.
Intermediate · 10 min read · Updated
What you will learn
Recognise displacement and use it to confirm a market structure shift after a liquidity sweep.
Read first: Market Structure in ICT: Swing Highs, Swing Lows and Breaks of Structure · Liquidity Sweeps and Stop Runs: Reading a Failed Breakout
What displacement looks like
Displacement is easy to see and hard to define with one number. Its usual features are large candle bodies with small wicks, consecutive closes in the same direction, and a fair value gap left behind because price moved too fast for two-way trading. Many traders add a measurable filter, for example a candle range above a multiple of the recent average true range, so that the definition does not change from one day to the next.
Market structure shift
In a downtrend, the most recent lower high is the level that keeps the bearish sequence alive. When price sweeps a low and then breaks above that lower high with displacement, ICT calls it a market structure shift: the sequence of lower highs is broken and a bullish reading becomes possible. The mirror applies to a shift from bullish to bearish.
Hypothetical example · Sweep, then shift
Price has made lower highs at 109.6 and 107.9. It sweeps below the last low to 102.6, then a large bullish candle closes at 108.4, above 107.9. The lower high is broken with displacement: that is the shift. The fair value gap left by the move becomes the area to watch for an entry.
MSS, BOS and CHoCH
| Term | Direction | Origin |
|---|---|---|
| Break of structure (BOS) | With the trend | General term, used by ICT |
| Market structure shift (MSS) | Against the trend, with displacement | ICT |
| Change of character (CHoCH) | First break against the trend | Smart Money Concepts community |
The key difference between ICT’s MSS and a simple break is the context: a sweep of liquidity first, then a break made with displacement.
Why the sweep comes first
A break against the trend without a prior sweep often fails, because the opposite liquidity is still waiting. When the pool has just been taken, the fuel for the previous direction is partly used up. This is a reasoning about probabilities, not a rule that always works.
Invalidation and risk
- The shift is invalidated if price returns beyond the sweep extreme.
- Waiting for the retracement into the gap or the order block usually gives a better risk-to-reward ratio than buying the displacement candle.
- A shift on the 1-minute chart against the 4-hour trend is a weaker signal than one aligned with it.
Measuring displacement with the average true range
The average true range (ATR) measures the typical range of a candle over a period, often 14 candles. Comparing a candle to it turns “a big candle” into a number.
Hypothetical example · Is this displacement?
On a 5-minute chart, the 14-period ATR is 8 points. A bullish candle has a low of 18,404, a high of 18,419 and closes at 18,417. Its range is 15 points, about 1.9 times the ATR, and it closes in the top quarter of its range. With a rule of “range above 1.5 × ATR and a close in the top quarter of the candle”, it qualifies. A candle of 9 points, about 1.1 times the ATR, would not.
Other filters are possible: two or three consecutive candles whose combined range exceeds a threshold, or the presence of a fair value gap. Whatever you choose, apply it to every case. Changing the definition after seeing the result is the fastest way to fool yourself.
Common mistakes
- Calling a small break without displacement a shift.
- Breaking an internal swing instead of the swing that defined the trend.
- Entering on the break itself, far from the invalidation level.
The ICT 2022 and Unicorn indicators apply these rules with fixed parameters, which makes the shift objective and testable.
Practice exercise
On a 5-minute chart, find three sweeps of the previous day high or low. For each, check whether a market structure shift with displacement followed within one hour, and mark the fair value gap it left. Write the invalidation level in each case.
Check your understanding
1. What is a market structure shift in ICT?
- Any new high
- A break of the last swing against the trend, made with displacement
- A gap at the open
Show the answer
Answer: A break of the last swing against the trend, made with displacement. The MSS breaks the swing that kept the trend alive, with displacement.
2. Which feature is typical of displacement?
- Small bodies and long wicks
- Large bodies, consecutive closes and a fair value gap
- A doji
Show the answer
Answer: Large bodies, consecutive closes and a fair value gap. Displacement is a fast, one-sided move that often leaves an imbalance.
3. Where is the shift invalidated?
- Beyond the sweep extreme
- At the midpoint of the day
- At the first fair value gap
Show the answer
Answer: Beyond the sweep extreme. A return beyond the sweep extreme cancels the reversal reading.
Practise with the free tools
Frequently asked questions
Is MSS the same as CHoCH?
They are close. CHoCH is a Smart Money Concepts label for the first break against the trend; ICT’s MSS adds the context of a liquidity sweep and displacement.
How strong must displacement be?
Define it with a measurable rule, for example a candle range above 1.5 times the average true range, and keep the rule fixed for testing.
Should I enter on the displacement candle?
Usually not. The stop would be far away. The retracement into the fair value gap or order block gives a closer invalidation.
Related lessons
References and further reading
- The Inner Circle Trader — official YouTube channel — Michael J. Huddleston
- E-mini Nasdaq-100 futures contract specifications — CME Group
Written with the help of AI tools, then checked against the sources listed and our methodology. Report an error and we will correct it. Methodology · Editorial policy · Report an error
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