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Premium / Discount in a Dealing Rangea location filter, never a signal

Evidence: ModerateIntermediateMarket Structure · Location

A dealing range runs from a clear swing low to a clear swing high. Its midpoint is equilibrium: the upper half is premium, the lower half is discount.

The rule: in a bullish range, only consider longs in the discount half; in a bearish one, only shorts in the premium half.

This is a location filter, not a signal. Being in discount is not on its own a reason to buy — it only tells you that if you already have a reason, this is a place worth taking it.

Category
Market Structure · Location
Timeframe
M15 primary · M5 for entry refinement
Suitable pairs
USDJPY · EURUSD · GBPUSD · XAUUSD
Session
London and New York
Indicators / tools
The dealing range, swing low to swing high · the 50% equilibrium · ATR(14)

Valid setup

S35 · PREMIUM / DISCOUNT ENTRY IN A DEALING RANGE — VALID SETUP USDJPY · M15 · the range is defined first; premium and discount are just its two halves LONG 147.81 148.06 148.32 148.57 148.82 149.08 149.33 PREMIUM — do not buy here DISCOUNT — longs are only considered in this half RANGE HIGH EQUILIBRIUM (50 %) RANGE LOW ENTRY on the reaction close in discount SL below the range low 1R target = range high range low range high 1 2 3 4 5 6 ① The dealing range is defined FIRST: a clear swing low to a clear swing high. Equilibrium is simply their midpoint. ② Price retraces out of premium. ③ It reaches DISCOUNT — the lower half. Only here is a long considered, because only here is the stop close and the target far. That part is arithmetic, not prediction. ④ ENTRY on the reaction close inside discount ⑤ TP1 at equilibrium ⑥ TP2 at the range high. Once price is back in premium, this setup no longer exists. 148.96 148.45 148.04 147.93 147.91 discount entry

Exact rules

Entry

  • Define the dealing range: one clear swing low and one clear swing high. Mark both.
  • Equilibrium = (high + low) ÷ 2. Draw a line on it.
  • For a long, price must be in the discount half — below equilibrium.
  • You still need a reason — a sweep, a change of character, a level. Being in discount is not an entry criterion.
  • Enter at that reason's confirmation close, inside the discount half.

Stop loss

  • 0.25 × ATR(14) below the range low.
  • If price closes below the range low, the range has broken and the whole framework is finished.
  • Risk 0.5%–1%.

Take profit / exit

  • TP1 = equilibrium, the 50% mark. Closing half the position there is reasonable.
  • TP2 = the range high.
  • Once price reaches premium, this setup is over. Going further is a different thesis.

Build Premium / Discount in a Dealing Range

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Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.