Premium & Discount Arrays
Selling in premium and buying in discount.
Premium & Discount
Commonly refered to as Optimal Trade Entry (OTE), Equilibrium or Premium & Discount.
As traders, we aim to buy at a discount and sell (short) at a premium.
The Equilibrium, marked at the 0.5 level of a price range, can also serve as a confluence for potential trade entries.
Good vs Bad Premium & Discount
To mark out Premium & Discount, we first identify the Swing High and Swing Low that define the most recent price range.
Fair Value Gap (FVG)
A Fair Value Gap (FVG) is a three-candle pattern where the middle candle’s body creates a gap that the wicks of the other candles do not fill.
They represent areas of market Imbalance and Inefficiency, where price hasn’t filled all resting orders.
Usually, price tends to return to this areas to fill the orders before continuing in its original direction.
Offering fair value to the uninvolved traders.
Inverse Fair Value Gap (IFVG)
An Inverse Fair Value Gap (IFVG) occurs when price closes beyond a previous Fair Value Gap, invalidating it.
Afterward, it often acts as a support or resistance level in the opposite direction.
Balanced Price Range (BPR)
A Balanced Price Range (BPR) combines a Fair Value Gap and an Inverse Fair Value Gap.
It’s the overlapping zone where an Inverse Fair Value Gap formed, followed by a Fair Value Gap in the opposite direction.
