The trading range in plain words — premium, discount and reading direction

The boundaries of a range are a confirmed high on top and a confirmed low at the bottom. Confirmed means this: price was brought back to the previous pullback, the orders there were taken, and only after that does the extreme count as a foundation.

Split it in half. The upper half is premium: price at a markup, and that is the half you look for sells from. The lower half is discount: price at a discount, and that is where you look for buys. Expensive and cheap not in general, but inside this move.

The caveat without which the rule lies

Price does not have to come back to discount. When a strong participant is behind the move, the correction can be only a third of the impulse, and the lower half is never reached. That happens often on indices, on gold, on bitcoin. A shallow pullback is not the rule breaking, it is a sign of strength. So the half answers not the question what to do, but the question where we are right now.

Reading direction

Direction is read from two ranges in a row. The second one counts as formed when price closed a candle body beyond the boundary of the first, not when it merely touched it. If both step down, the move is a downtrend, and it stays valid until the high of the last one is broken.

A live example: EURUSD, daily

August 1, 2025 — the lower boundary at 1.13916. September 17, 2025 — the upper boundary at 1.19188. The midpoint, the split between premium and discount — 1.16552. November 5, 2025 — price returned into discount, a low of 1.14687. January 27, 2026 — a break above the upper boundary at 1.20826: 614 points from the return.

The trading range is the working unit of the FocusProfit methodology. The FocusProfit Trade Model indicator builds ranges automatically and shows the midpoint and the halves directly on the chart.

A deeper breakdown of how ranges relate to market structure is in the methodology section. The next lesson in the course is impulse and correction — where the range itself comes from.