Premium and discount describe where price sits within a range relative to its midpoint. Split a swing from low to high with a Fibonacci tool: the upper half is premium (expensive) and the lower half is discount (cheap). The 50% line between them is equilibrium.
Why it matters
The idea is to buy at a discount and sell at a premium — the same logic as any market. In a bullish scenario you want longs from the discount zone, and in a bearish scenario you want shorts from the premium zone. It stops you chasing price at expensive levels.
How to apply it
- Draw the Fibonacci from the range low to the range high (or high to low).
- For longs, favour setups in the discount half; for shorts, the premium half.
- Combine with order blocks or FVGs that sit in the favourable zone.
- Redraw the range as structure updates — premium and discount are relative.
Premium is the expensive upper half of a range, discount the cheap lower half — buy discount, sell premium.