To improve the water budgeting of forested catchments and inform relevant hydrologic theory regarding water cycling within forests, the scientific community has been seeking simple, inexpensive, direct methods for determining rain water storage on in situ tree canopies. This paper evaluates an installation arrangement and routine for one such method: mechanical displacement sensors placed on a tree's trunk to directly monitor compression under canopy water loading from rainfall. The evaluated installation routine aligns mechanical displacement sensors along orthogonal axes passing through the mechanical center of the trunk to reduce wind-induced noise. The experimental attainment of neutral bending axes for a subject hardwood and softwood tree suggests the routine is precise and approximates the trunk's mechanical center well regardless of differences in cellular axial stiffness between heart and sapwood. When installed in this precise sensor arrangement, bending tests of different loading directions produced a consistent signal ratio between sensor pairs of approximately −1 (1 unit compression/1 unit elongation), allowing the identification and removal of bending strains from the raw strain signals to isolate the compression component attributable to canopy water storage loads. The same experiments performed on sensors just 5 cm off the trunk's computed mechanical center were unable to produce neutral bending axes or consistent signal ratios during bending from variable loading directions. Results from the method evaluation were translated into a data processing technique that is then applied to strain data collected through two sample rain events (one each for the hardwood and softwood trees). The processed strain data showed a clear synchronicity between rainfall and canopy loading, as well as periods of maximized canopy water loading (canopy storage capacity). Our results indicate that the evaluated arrangement and installation procedure for mechanical displacement sensors may be able to provide scientists with simple, direct canopy water storage estimates at high temporal resolution and sensitivity.