Displacement Sweep Reversal

Displacement Sweep Reversal with FVG detects trend reversals following liquidity sweeps by combining price action patterns with Fair Value Gaps (FVG). By identifying key swing pivots, structural breaks, and displacement moves, this indicator helps traders isolate high probability setups where market momentum shifts decisively. It provides a systematic approach to identifying exhaustion after a liquidity run, ensuring that entries are backed by meaningful displacement and institutional style order imbalances.

How to Trade the Displacement Sweep Reversal with FVG?

Trading with this indicator involves waiting for a confluence of market events. First, identify when the price performs a liquidity sweep by taking out a previous high or low. Once the sweep occurs, the indicator monitors the price to see if it breaks the opposing structural point, such as the last higher low or lower high. This break must be confirmed by a candle with a significant body size to prove genuine displacement.

When the structure shift is confirmed, the indicator checks for the presence of a valid Fair Value Gap. If all conditions are met, a signal is generated, and a blue entry window box appears on your chart. This box highlights the specific area of interest and a time window during which you should look for a retracement. The goal is to enter the market when price pulls back into the entry window, aligning with the newly established momentum while utilizing the FVG as a zone of potential support or resistance.

Displacement Sweep Reversal with FVG Settings

Structure and Detection

• Swing pivot length: Defines the number of bars on each side of a potential pivot to confirm a swing point.
• Maximum bars to structure break: Sets the time limit allowed between the initial liquidity sweep and the subsequent market structure shift.
• ATR length: Determines the period used to calculate volatility, which calibrates the size of candle bodies and Fair Value Gaps.
• Significant body (ATR multiple): Sets the threshold for what qualifies as a strong displacement candle.
• Minimum FVG size (ATR multiple): Filters out minor price gaps, ensuring only significant order imbalances are highlighted.

Entry and Visuals

• Entry window bars: Controls how many bars the system will keep the entry box active after a valid signal is detected.
• Entry window opacity: Adjusts the transparency of the entry window fill to suit your chart preference.
• Style settings: Includes options to customize the colors of the structure break lines, sweep labels, and bullish or bearish FVG boxes.

Frequently Asked Questions

Can this indicator be used on any timeframe?

What defines a valid FVG for this indicator?

Does the indicator provide alerts?