Statistical Mapping
Premium-Discount
05.08.2024
Master the concept of premium and discount zones to identify potential price reversal points. Learn how these levels can help you understand areas where price is heavily overbought or oversold.
Bullish Bias
Simply put, everything below the opening price is considered a discount, while everything above the opening price is considered a premium.
When a bullish bias is identified, one would ideally look to buy when the price is at a discount — meaning it’s cheaper. Statistically, the low of the session or the low of the candle you’re observing should align with the [+]Manipulation or [+]M price level.
Using this framework, we can define three key zones for potential long entries: Discount, Deep Discount, and Extreme Discount. As mentioned earlier, “Discount” includes all prices below the opening. “Deep Discount” is when the price falls below the [+]M level, which is below the typical statistical threshold for how far a bullish session or candle expands before reversing upward. “Extreme Discount” occurs when the price trades below the [-]Distribution level, which represents the statistical low of bearish sessions. Even in the case of a bearish candle, prices would be considered oversold at this level.
Bullish Bias
Simply put, everything below the opening price is considered a discount, while everything above the opening price is considered a premium.
When a bullish bias is identified, one would ideally look to buy when the price is at a discount — meaning it’s cheaper. Statistically, the low of the session or the low of the candle you’re observing should align with the [+]Manipulation or [+]M price level.
Using this framework, we can define three key zones for potential long entries: Discount, Deep Discount, and Extreme Discount. As mentioned earlier, “Discount” includes all prices below the opening. “Deep Discount” is when the price falls below the [+]M level, which is below the typical statistical threshold for how far a bullish session or candle expands before reversing upward. “Extreme Discount” occurs when the price trades below the [-]Distribution level, which represents the statistical low of bearish sessions. Even in the case of a bearish candle, prices would be considered oversold at this level.
Bullish Bias
Simply put, everything below the opening price is considered a discount, while everything above the opening price is considered a premium.
When a bullish bias is identified, one would ideally look to buy when the price is at a discount — meaning it’s cheaper. Statistically, the low of the session or the low of the candle you’re observing should align with the [+]Manipulation or [+]M price level.
Using this framework, we can define three key zones for potential long entries: Discount, Deep Discount, and Extreme Discount. As mentioned earlier, “Discount” includes all prices below the opening. “Deep Discount” is when the price falls below the [+]M level, which is below the typical statistical threshold for how far a bullish session or candle expands before reversing upward. “Extreme Discount” occurs when the price trades below the [-]Distribution level, which represents the statistical low of bearish sessions. Even in the case of a bearish candle, prices would be considered oversold at this level.
Bearish Bias
In a bearish bias, everything above the opening price is considered a premium, and you would aim to sell when the price is expensive. Statistically, the high of the session or the high of the candle you’re observing should coincide with the [-]Manipulation or [-]M price level.
Similar to the bullish framework, we can define three zones for potential short entries: Premium, Deep Premium, and Extreme Premium. “Premium” includes all prices above the opening. “Deep Premium” refers to when the price moves above the [-]M level, indicating it has exceeded the typical statistical range of how far a bearish candle or session expands upward before reversing. “Extreme Premium” occurs when the price rises above the [+]Distribution level, which represents the statistical high of bullish sessions. At this point, even if the candle is bullish, the price would be considered overbought and may signal a reversal opportunity.
Bearish Bias
In a bearish bias, everything above the opening price is considered a premium, and you would aim to sell when the price is expensive. Statistically, the high of the session or the high of the candle you’re observing should coincide with the [-]Manipulation or [-]M price level.
Similar to the bullish framework, we can define three zones for potential short entries: Premium, Deep Premium, and Extreme Premium. “Premium” includes all prices above the opening. “Deep Premium” refers to when the price moves above the [-]M level, indicating it has exceeded the typical statistical range of how far a bearish candle or session expands upward before reversing. “Extreme Premium” occurs when the price rises above the [+]Distribution level, which represents the statistical high of bullish sessions. At this point, even if the candle is bullish, the price would be considered overbought and may signal a reversal opportunity.
Bearish Bias
In a bearish bias, everything above the opening price is considered a premium, and you would aim to sell when the price is expensive. Statistically, the high of the session or the high of the candle you’re observing should coincide with the [-]Manipulation or [-]M price level.
Similar to the bullish framework, we can define three zones for potential short entries: Premium, Deep Premium, and Extreme Premium. “Premium” includes all prices above the opening. “Deep Premium” refers to when the price moves above the [-]M level, indicating it has exceeded the typical statistical range of how far a bearish candle or session expands upward before reversing. “Extreme Premium” occurs when the price rises above the [+]Distribution level, which represents the statistical high of bullish sessions. At this point, even if the candle is bullish, the price would be considered overbought and may signal a reversal opportunity.
Liquidity Pools and Manipulation Levels: A Powerful Combination
Pairing Liquidity Pools (Session Highs/Lows, Previous Day’s High/Low) with Manipulation Levels can enhance trade setups. Liquidity often builds around these key levels, and when price taps into them near a Manipulation Level, large orders can trigger sharp reversals.
Reversals at Liquidity Sweeps: If price sweeps a Session High or Previous Low and aligns with a Manipulation Level, this can signal a high-probability reversal as liquidity is absorbed and momentum fades.
Extreme Discount or Premium Zones: When price reaches extreme manipulation levels while interacting with liquidity pools, it could suggest that the market is exhausted and ripe for a reversal.
Combining these levels helps identify strong trade opportunities where large orders are likely to drive significant market moves.
Liquidity Pools and Manipulation Levels: A Powerful Combination
Pairing Liquidity Pools (Session Highs/Lows, Previous Day’s High/Low) with Manipulation Levels can enhance trade setups. Liquidity often builds around these key levels, and when price taps into them near a Manipulation Level, large orders can trigger sharp reversals.
Reversals at Liquidity Sweeps: If price sweeps a Session High or Previous Low and aligns with a Manipulation Level, this can signal a high-probability reversal as liquidity is absorbed and momentum fades.
Extreme Discount or Premium Zones: When price reaches extreme manipulation levels while interacting with liquidity pools, it could suggest that the market is exhausted and ripe for a reversal.
Combining these levels helps identify strong trade opportunities where large orders are likely to drive significant market moves.
Liquidity Pools and Manipulation Levels: A Powerful Combination
Pairing Liquidity Pools (Session Highs/Lows, Previous Day’s High/Low) with Manipulation Levels can enhance trade setups. Liquidity often builds around these key levels, and when price taps into them near a Manipulation Level, large orders can trigger sharp reversals.
Reversals at Liquidity Sweeps: If price sweeps a Session High or Previous Low and aligns with a Manipulation Level, this can signal a high-probability reversal as liquidity is absorbed and momentum fades.
Extreme Discount or Premium Zones: When price reaches extreme manipulation levels while interacting with liquidity pools, it could suggest that the market is exhausted and ripe for a reversal.
Combining these levels helps identify strong trade opportunities where large orders are likely to drive significant market moves.