Chapter 2 Lesson 7 – Premium discount array matrix

Question 1

What are the price arrays that we can expect price to trade to, react off of, and that we can use to formulate trades?

Answer 1

Rejection block
Order block
Breaker block
Mitigation block
Liquidity void
Fair value gap

Question 2

How can we use the PD array matrix to form a bias?

Answer 2

Use the premium discount array matrix on higher timeframes, ideally monthly and weekly. The hierarchy of the PD array matrix will indicate points of interest where price could potentially trade to, and react off of. It’s important to note that only some, and not all of these PD arrays could be present.

The PD arrays in the premium zone can be used as targets for bullish trades, or as points of interest to frame bearish trades.

The PD arrays in the discount zone can be used as targets for bearish trades, or as points of interest to frame bullish trades.

Question 3

What’s the order of the PD arrays in a premium/discount range?

Answer 3

Bearish premium arrays:
– old high\Low
– rejection block
– bearish order block
– FVG
– Liquidity void
– bearish breaker block - if there’s a bearish breaker block, it’s highly unlikely that price will reach the liquidity void.
– bearish mitigation block - typically a classic sell setup

Bullish discount arrays:
– bullish mitigation block - typically a classic buy setup
– bullish breaker block - if there’s a bullish breaker block, it’s highly unlikely that price will reach the liquidity void.
– Liquidity void
– FVG
– bullish order block
– rejection block
– old low\high

Question 4

How should the premium/discount range be used when trading?

Answer 4

If you’re in a buy trade, then it’s advisable to exit the trade when price enters the premium zone.
If you’re in a sell trade, then it’s advisable to exit the trade when price enters the discount zone.

Question 5

What is the PD array matrix?

Answer 5

The PD array matrix is a framework that can be used to determine whether the market is in a premium or discount state. The PD arrays that form within a price range can be used to frame entry points for trades, and also as targets, or exit points, for trades.