Fractal Trading Course
Chapter 2 — Understanding Pullbacks After Displacement
Course Roadmap
Based on the lecture, the learning sequence is:
Fractal & POI Foundation
Pullback
Continuation
Liquidity
Entry Patterns
Advanced Entry Concepts
Advanced Structure & Execution
This lecture specifically develops the concept of what happens after displacement and how to identify and capture the pullback.
MODULE 1 — Understanding the Fractal Nature of Price
Step 1: Understand that price is not completely random
Price does not simply move randomly:
Up
Down
Up again
Suddenly reverse
Suddenly create a huge candle
Instead, price repeatedly follows recognizable structural patterns.
The lecture identifies approximately six major price behaviours, with a seventh being a relatively rare condition:
Range
Displacement
Pullback
Expansion
Continuation
Reversal
News/uncertainty-driven erratic movement
The important idea is:
The pattern is relatively consistent, while the size, duration and exact structure can change.
MODULE 2 — The Basic Price Cycle
The core sequence is:
Range → Displacement → Pullback → Expansion → Pullback → Continuation → Reversal
1. Range
Price consolidates within an area.
2. Displacement
Price makes a strong directional move from a higher-timeframe POI.
3. Pullback
After the initial displacement, price retraces.
4. Expansion
Price resumes the directional move.
5. Continuation
Price continues in the same direction after another pullback.
6. Reversal
The market eventually changes its directional bias.
7. Unclear/News Movement
When buyers and sellers are temporarily unclear because of news or other factors, large alternating candles may appear.
The lecture treats this as the rarest and least structured condition.
MODULE 3 — What Is Displacement?
Definition
Displacement is the initial strong move that begins from a higher-timeframe POI.
For example:
Daily POI → Price taps POI → Strong directional move
That initial move is the displacement.
Do not confuse this with the later continuation movement.
The previous lecture's process was:
Daily POI → 4H refinement → 15M entry
That process is designed to capture the initial displacement.
MODULE 4 — What Happens After Displacement?
This is the main subject of Lecture 2.
Once displacement occurs:
Displacement → Pullback
The important question becomes:
Question 1
Where will the pullback start/reverse?
Question 2
How far will the pullback travel?
These two questions are the foundation of the lecture.
MODULE 5 — The Two Most Important Pullback Questions
Question 1 — Where will the pullback come from?
You must identify the POI or structural area from which price is likely to react.
Possible areas include:
Order Block
FVG
Mitigation
Other POIs
Liquidity
Lower-timeframe POIs
But simply finding a POI is not enough.
You must determine whether that POI is:
Strong
Weak
Genuine
Fake
Supported by the current bias
Unsupported by the current bias
Question 2 — Where will the pullback end?
Knowing the starting point is only half the job.
You also need to identify the destination of the pullback.
The lecture emphasizes that the pullback can often move toward the last POI created during the displacement.
Therefore:
Pullback Start + Pullback Destination = Complete Pullback Map
MODULE 6 — Why Pullback Destination Matters
Suppose you enter because you correctly identified a pullback.
If you don't know where that pullback is expected to finish, you may:
Enter correctly.
Fail to take profit.
Watch price continue.
Become confused.
Exit at the wrong location.
Enter again randomly.
Get trapped by continuation.
Eventually take a loss.
This creates a psychological chain:
Missed Exit → Confusion → Overtrading → Emotional Decision → Loss
The lecture's core message is:
Before entering a trade, know where you expect the move to end.
MODULE 7 — Bias Comes Before Pullback
This is one of the most important lessons.
Never search for a pullback without knowing the market bias.
First determine:
Where does price actually want to go?
Then determine:
Where can the pullback occur?
For example:
Bullish Bias
Price wants to move upward.
Therefore:
Displacement ↑ → Pullback ↓ → Continuation ↑
Bearish Bias
Price wants to move downward.
Therefore:
Displacement ↓ → Pullback ↑ → Continuation ↓
The lecture repeatedly emphasizes that bias is essential when evaluating weak or strong POIs.
MODULE 8 — Strong vs Weak Order Block
One of the key concepts of this lecture is identifying whether an Order Block is actually reliable.
Basic Weak Order Block Test
Suppose you have a 4H Order Block.
Now inspect the corresponding 1H structure.
Case A — 4H OB exists but 1H has no corresponding POI
This creates a data mismatch.
According to the lecture, this is a warning sign that the Order Block may be weak.
Case B — 4H OB contains a 1H POI
There is better structural alignment.
Therefore, the Order Block has additional support.
MODULE 9 — Candle-Color Test
Another simplified method discussed in the lecture:
If a pullback consists almost entirely of candles of the same color, the corresponding Order Block may be weak.
For example:
Strong downward sequence → mostly same-colored candles
This can indicate that the Order Block may not have enough internal opposing structure.
However:
Important Rule
Same-colored candles alone do NOT automatically make an Order Block weak.
You must combine this with the POI/data-mismatch analysis and market bias.
MODULE 10 — Data Mismatch + Bias
This is the more advanced concept.
Weak POI + Against Bias
Higher probability of failure.
Weak POI + Supported by Bias
It can still work.
Strong POI + Against Bias
It can also fail.
Therefore:
Do not judge an Order Block in isolation.
You must evaluate:
POI Strength + Timeframe Alignment + Market Bias + Location
The lecture explicitly states that even a weak Order Block can work when the broader bias supports it.
MODULE 11 — What If There Is No Clear POI?
Sometimes you inspect:
4H
1H
15M
…and cannot find a convincing POI.
In that situation, the lecture proposes looking at liquidity.
The basic logic becomes:
No clear POI → Look for liquidity → Liquidity grab → Directional move
This is presented as a fallback structural mechanism rather than blindly forcing an Order Block.
MODULE 12 — Refinement Process
The lecture demonstrates a top-down process:
Higher Timeframe
Identify the broad area.
↓
4H
Check for relevant POI.
↓
1H
Refine and check whether supporting POI exists.
↓
15M
Look for the final relevant POI/structure.
The purpose is not to keep changing timeframes randomly.
The objective is to progressively refine the area and understand the structure.
MODULE 13 — Session Timing
Another important rule from the lecture:
Do not take entries randomly at any time.
The lecture emphasizes taking entries during relevant market sessions, with Asia being used in its examples.
The reasoning is that a session can create fresh:
POIs
Order Blocks
FVGs
Liquidity
Displacement
Therefore:
Wait → Session begins → New structure develops → Evaluate → Execute
MODULE 14 — Pullback Trading Framework
Here is the complete framework extracted from Lecture 2:
STEP 1 — Determine Bias
Ask:
Where does price want to go?
STEP 2 — Identify the Displacement
Find the initial directional move from the relevant POI.
STEP 3 — Find the Pullback Origin
Ask:
Where can price reverse temporarily?
Evaluate:
Order Block
FVG
Mitigation
POI
Liquidity
STEP 4 — Test POI Strength
Check:
Higher-timeframe POI
Lower-timeframe POI
Data mismatch
Candle structure
Bias
Location
STEP 5 — Find the Pullback Destination
Ask:
Where should this pullback finish?
Look for the relevant POI created during the displacement or the next logical structural destination.
STEP 6 — Wait for the Appropriate Session
Do not force an entry simply because a POI exists.
STEP 7 — Refine on Lower Timeframes
Move down systematically:
4H → 1H → 15M
rather than randomly switching between timeframes.
STEP 8 — Execute Only When the Structure Aligns
The lecture separates understanding the pullback from the detailed entry-pattern lessons that come later.
STEP 9 — Close the Pullback Trade at the Planned Destination
Once the expected pullback is complete, do not automatically assume continuation.
Continuation is a separate concept covered in Lecture 3.
MODULE 15 — Pullback Size Depends on Displacement
A very important principle:
Small displacement generally produces a smaller pullback; a larger displacement can provide a larger structural opportunity.
The lecture gives examples where different displacements have different:
Point ranges
Durations
Structures
Pullback sizes
There is no fixed rule such as:
"Every displacement must be 80 points."
The pattern is fixed, but time, length and exact structure can vary.
MODULE 16 — Do Not Expect Identical Structures
This is a major anti-overfitting lesson.
Do not assume:
Every pullback starts from 15M.
Every reaction comes from 1H.
Every move has the same number of points.
Every displacement takes the same amount of time.
Every Order Block behaves identically.
Instead:
Core pattern = consistent
Exact structure = variable
This is why blindly applying a fixed setup can fail.
MODULE 17 — Advanced Pullback Situations
Some situations are more difficult.
For example:
Two Order Blocks are extremely close
Instead of treating them as two completely independent areas, the lecture suggests considering whether they effectively form one combined zone.
Very small displacement
If the displacement itself is small, don't expect a huge pullback.
Example concept from the lecture:
18-point displacement → approximately 10-point pullback
The exact ratio is not presented as a universal formula; it illustrates that pullback size depends on the preceding structure.
MODULE 18 — The Most Difficult Situation
One of the hardest structures is when price takes liquidity from both sides of a swing structure before making the directional move.
Conceptually:
Liquidity A → Liquidity B → Displacement → Pullback → Continuation
These situations require more advanced structural reading and are not always easy to identify.
MODULE 19 — The Fractal Principle
The lecture uses an analogy:
Different opponents may attack in different ways, but the core objective remains the same.
Similarly, price can create different structures:
Liquidity grab
Order Block reaction
FVG reaction
Mitigation
Weak Order Block
Strong Order Block
Different timeframe structures
But the underlying process remains:
Price moves → Pullback → Further movement
The trader's job is to understand how the current structure is expressing the core pattern, rather than expecting the exact same chart formation every time.
MODULE 20 — Complete Pullback Checklist
Before taking a pullback trade, ask:
Market Structure
☐ What is the current bias?
☐ Where did displacement originate?
☐ Is the displacement bullish or bearish?
Pullback Origin
☐ Where is the likely pullback origin?
☐ Is there an Order Block?
☐ Is there an FVG?
☐ Is there mitigation?
☐ Is liquidity involved?
POI Quality
☐ Is the Order Block strong or weak?
☐ Is there timeframe alignment?
☐ Is there data mismatch?
☐ Are the candles giving a warning?
☐ Does the broader bias support the POI?
Pullback Destination
☐ Where should the pullback end?
☐ What is the relevant last POI?
☐ Is liquidity the likely destination?
Execution
☐ Is the relevant trading session active?
☐ Has the structure formed?
☐ Has the entry area been refined?
☐ Am I following the plan rather than reacting emotionally?
MODULE 21 — The 3 Golden Rules of Pullback
The lecture ultimately simplifies the concept into three essential questions:
1. Where will the pullback come from?
Identify the origin.
2. Where will the pullback go?
Identify the destination.
3. Where should the entry be taken?
Wait for the appropriate entry structure/session.
MODULE 22 — Key Concepts to Master
Before moving to Lecture 3, you should be able to explain these concepts yourself:
Fractal nature of price
Range
Displacement
Pullback
Expansion
Continuation
Reversal
Market bias
POI
Order Block
Strong Order Block
Weak Order Block
Data mismatch
Liquidity
Liquidity grab
FVG
Mitigation
Multi-timeframe refinement
Session-based execution
Pullback origin
Pullback destination
FINAL MASTER FORMULA
The Lecture 2 Process
1. Find Bias
↓
2. Identify Displacement
↓
3. Find Possible Pullback Origin
↓
4. Evaluate POI Quality
↓
5. Check Higher/Lower-Timeframe Alignment
↓
6. If POI Is Unclear → Evaluate Liquidity
↓
7. Determine Pullback Destination
↓
8. Wait for Relevant Session
↓
9. Refine Structure
↓
10. Take the Planned Entry
↓
11. Complete the Pullback Trade
↓
12. Do NOT confuse Pullback with Continuation
Lecture 3 = Continuation
Quick recap sticky notes Important Lesson
Most Important Lesson
The central message of Lecture 2 is not simply "find an Order Block and trade it."
It is:
Understand why price is pulling back, where the pullback is likely to originate, where it is likely to terminate, and how the current bias and fractal structure support that interpretation.
Lesson 1
Reviewed by Admin team
on
September 17, 2026
Rating:
