Equilibrium

Equilibrium is the middle of the range. Premium sits above it, discount below it. Traders use it as the line a pullback should reach before a discount entry is allowed, and as a magnet in a balanced range, where price often rotates around the middle because that is where neither side is extended. It is not VWAP and it is not the point of control. Those are volume-weighted middles. Equilibrium is the plain average of two prices you picked. If your two prices are the obvious external high and low, the midpoint is a reasonable first location. If your two prices are arbitrary, the midpoint is arbitrary too.

Draw it once per dealing range. In a range regime, fades from the extremes target equilibrium first, not the opposite extreme. Taking partial profits at the middle respects the fact that many rotations die there. In a trend regime, a pullback to equilibrium that holds is a standard continuation location, the same trade as a 50 percent retracement. A break of equilibrium is not, by itself, a change of trend. The external swing has to break. The middle is not the skeleton. The highs and lows are.

Use equilibrium as the first target of a range trade and as the gate for pullback entries. If you are long from discount, the middle is where you can reduce risk and finance the stop. If you are waiting to enter and price never reaches the middle, you waited. Do not drag the line up to the current pullback and call it equilibrium. And do not confuse it with a volume level that is visibly elsewhere. When the point of control and the midpoint disagree, you have learned something about the range: business was not done in the geometric middle.

Treating a cross of equilibrium as a break of structure. It is a cross of a midpoint. Also using it on a one-swing range that is really a trend leg, where the "middle" will be left behind quickly and will look like a failed level. And averaging the high and low of a wick-dominated spike. A midpoint set by a one-tick extreme is a midpoint of noise.

Two prices contain no volume, no time, and no open interest. Equilibrium will not match the price where the market actually traded the most, except by coincidence. It is a simple filter. The moment you need a fair price rather than a halfway price, use VWAP or a volume profile and let equilibrium be the rough version it is.