Discount and Premium Based on Range Low to Range High:
This chart focuses on distinguishing between discount and premium zones within a specific price range, defined by range low and high. Recognizing where the recent sell-side and buy-side liquidity accumulates is essential for identifying potential areas of support and resistance. This understanding aids traders in developing strategies for optimal entry and exit points by using liquidity as a guide to market dynamics.
- - Concept: Analyze the price range from low to high.
- - Liquidity Identification:
- - Sell-side liquidity may indicate buying support.
- - Buy-side liquidity may signal selling resistance.
- - Trading Insight: Know where these liquidity levels rest to guide entry and exit strategies.
Difference Between Discount and Premium:
This chart explains how tools like the Fibonacci tool or Gann Box can help traders delineate a range into distinct premium and discount zones. The premium zone represents the upper 50% of the range, indicating relatively higher prices, while the discount zone comprises the lower 50%, suggesting more attractive buying levels. This division helps traders frame their strategies, buying lower and selling higher within a selected range.
- - Tools Used: Apply Fibonacci or Gann Box to define range zones.
- - Zone Definitions:
- - Premium Zone: Upper 50% where prices are higher.
- - Discount Zone: Lower 50% where prices are lower.
- - Trading Approach: Target buys in discount zones and sells in premium zones.
Bullish Price Action:
In a bullish market environment, traders should focus on buying opportunities within the Discount Zone. By identifying confluences like Fair Value Gaps, Breaker Blocks, and Order Blocks within this zone, traders can enhance the likelihood of successful trades. These confluences serve as confirmations of potential support levels, aiding in strategic entry points during an upward trend.
- - Market Sentiment: Focus on buying in bullish conditions.
- - Zone to Target: Discount Zone.
- - Confluences to Identify:
- - Fair Value Gaps (FVG)
- - Breaker Blocks (BPR)
- - Inverse Fair Value Gaps (IFVG)
- - Order Blocks (OB)
- - Bullish Blocks (BB)
- - Strategic Benefit: Use confluences to confirm support levels and trend continuations.
Bearish Price Action:
In a bearish market, the attention shifts to selling opportunities within the Premium Zone. Recognizing confluences such as Fair Value Gaps and Order Blocks in this context enables traders to spot potential resistance levels. These signs are key for setting up strategic sell points, anticipating further downward momentum.
- - Market Sentiment: Focus on selling in bearish conditions.
- - Zone to Target: Premium Zone.
- - Confluences to Spot:
- - Fair Value Gaps (FVG)
- - Breaker Blocks (BPR)
- - Inverse Fair Value Gaps (IFVG)
- - Order Blocks (OB)
- - Bullish Blocks (BB) as resistance indicators.
- - Strategic Benefit: These serve as potential reversal or resistance cues to anticipate price declines.
