Price Action Concept
Last updated
Last updated
Fibonacci Ranges with OTE (Optimal Trade Entry) help identify high-probability trade entries within retracement levels:
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.
The Price Action Concepts settings provide tools for analyzing Fibonacci ranges and premium/discount zones:
Fibonacci Ranges: Enables Fibonacci retracement ranges with adjustable width (1 to 5), allowing traders to customize the span of the Fibonacci levels displayed.
Premium Discount: Highlights premium and discount zones based on equilibrium, helping traders see whether the price is in a value area for potential buying (discount) or selling (premium). Customizable color options distinguish these zones visually.
These settings assist in identifying retracement levels and value zones to enhance entry and exit decisions.
