Premium and discount are smart-money labels for where price sits inside a defined range (commonly the leg from the most recent swing low to the most recent swing high). The upper portion is 'premium' (overvalued, bias to sell), the lower portion is 'discount' (undervalued, bias to buy), and a narrow band around the 50% mark is 'equilibrium'.
A common parameterisation is the top 5% / bottom 5% / middle 5% of the range — strict thresholds that keep the labels useful. Some setups use larger bands (e.g. upper third / lower third), but the principle is the same: only buy in discount, only sell in premium, treat equilibrium as no-trade.
The framework is essentially the Fibonacci retracement 38.2 / 50 / 61.8 reframed for SMC traders, with the directional bias coming from the larger-timeframe trend.
Formula
range = swing_high − swing_low premium zone = top 5% of range equilibrium = middle 5% of range discount zone = bottom 5% of range
Example
Swing low 49,000, swing high 52,000. Range = 3,000. Premium zone ≥ 51,850; discount zone ≤ 49,150; equilibrium ≈ 50,425–50,575.
How Noon Barbari uses Premium / discount / equilibrium
Every concept here is implemented in the platform. Open the relevant docs or tool to see it in action.
Premium / discount in noonbarbari →Related terms
- Market structure
Order block
The last opposite-direction candle before a break of structure, used as a supply/demand zone.
- Market structure
Fair value gap (FVG)
A three-bar price imbalance where the wicks of bars t and t-2 fail to overlap.
- Market structure
Swing high
A local peak: a bar whose high is higher than the N bars on each side.
- Market structure
Swing low
A local trough: a bar whose low is lower than the N bars on each side.