Premium/Discount

Equilibrium / premium / discount zones (SMC).

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.

range = swing_high − swing_low
premium  zone = top 5% of range
equilibrium  = middle 5% of range
discount zone = bottom 5% of range

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