This paper presents a technique for a simple sensing principle that can be used for the measurement of displacement. The proposed sensor head is composed of a reflective grating panel and an optical fiber as a transceiver. The simplified layout contributes to resolving the issues of space restraints during installation and complex cabling problems in transmission fiber optic sensors. In order to verify the effectiveness of the proposed technique, it is important to obtain the sinusoidal signal reflected from the grating for reasonable phase tracking. In the numerical analysis, a real wave based optical beam model is proposed for the extraction of predicted signal according to the grating width and ratio of reflection bar width to spacing. The grating pattern design to obtain a sine wave reflected sensor signal was determined within an R-square value of 0.98 after sine curve fitting analysis. Consequently, the proposed sensor principle achieved the in-plane displacement measurement with a maximum accuracy error of 5.34 mu m.