Price Action Concept
Last updated
Last updated
Fibonacci Ranges with OTE (Optimal Trade Entry) are powerful tools for identifying high-probability trade entries within key retracement levels, offering opportunities for reversals or trend continuations. These zones are derived from Fibonacci retracement levels and are widely used in technical analysis.
Fibonacci Levels: Key levels are 61.8% and 78.6%, which form the OTE zone, where reversals or continuations are likely.
Trend Positioning:
Uptrend: After a break above a range, the OTE zone lies below the midpoint of the new range, suggesting a buy zone.
Downtrend: After a break below, the OTE zone lies above the midpoint, suggesting a sell zone.
Labels: The indicator marks these Fibonacci levels with prices, making it easy to spot the OTE area for entries aligned with the trend.
In essence, OTE within Fibonacci ranges provides ideal retracement levels for trend-aligned trades.
To understand Premium and Discount zones, it's essential to first grasp the concept of Equilibrium:
Equilibrium (Fair Value): This is the midpoint of a selected price range, representing the "fair value" within that range. It serves as a reference point to determine whether the price is in a premium or discount zone.
Premium Zone: The area above the equilibrium. Prices in this zone are considered overvalued relative to the range. Smart money and ICT (Inner Circle Trader) traders often look for sell opportunities in the premium zone, especially in a downtrend or after a significant upward movement.
Discount Zone: The area below the equilibrium. Prices in this zone are considered undervalued. Traders typically look for buy opportunities here, especially in an uptrend or after a downward movement.
Entry Zone (Gray Box): Marks the preferred area for entering a trade within the trend. In an uptrend, the entry zone lies in the discount zone below equilibrium; in a downtrend, it’s in the premium zone above equilibrium.
This indicator automatically detects price levels and ranks them based on market activity:
Predictive Levels: Calculates key price levels using volume and price volatility.
Level Ranking (0-10): Levels are scored based on the volume strength of price interactions—higher values indicate stronger levels.
Zone Ranking (0-10): Measures how long price stays within a zone—higher values indicate more significant consolidation zones.
Visual Elements:
Colored lines represent detected levels (gradient color from blue to orange based on rank).
Labels indicate ranking scores for levels and zones.
Zones highlight potential areas of interest.
This tool helps traders identify high-impact price levels and assess liquidity zones for potential reversals or breakouts.
These settings allow traders to enable different price action-based tools within the indicator:
Fibonacci Ranges:
Enables automatic plotting of Fibonacci retracement levels based on recent price movements.
The dropdown menu (default: 5) selects the number of Fibonacci levels to display.
Premium Discount:
Highlights areas of the chart based on the premium (overpriced) and discount (underpriced) zones.
Users can customize the colors for different sections (green for discount, red for premium, dark for neutral).
Predictive Zones:
Enables Predictive Zones Indicator, which detects key price levels and ranks them based on market activity.
Length (50): Defines the lookback period for detecting levels.
Width (4): Controls the thickness of the zone visualization on the chart.
These tools help traders analyze price action concepts and identify potential areas for reversals, support, or resistance.
