(binned per thread starter’s request) Winston's Supply and Deman

Supply and demand traders can get so caught up in their "zone" methodology that they forget about everything else.

In this segment I'll present a pattern of analysis that can be used to pick apart a chart and clarify areas logical for trading.


This GBPUSD 30 min chart clearly shows an uptrend followed by a downtrend. I'll take the turn from up to down and zoom in a bit. Next chart.

Notice on the left green pointer 1 and 2. Both of these bullish bars are wide range bars (WRB) and they are gaps.

A WRB is a bar that is larger than the previous 3 bars. Its nice when it significantly larger. A gap is when the high of the bar previous to the gap bar and the low of the bar after the WRB do not meet.

Notice as price falls on the right blue pointer 1 and blue pointer 2. These are bearish WRB gaps.

WRB gaps represent significant evidence of supply or demand. When this bars appear one should ask:
1. What did the WRB take out to its left?
2. Did it take out a swing, a shelf, a coil, etc?

WRB gaps not only represent evidence of significant supply and demand, they also indicate significant EFFORT. So ask yourself what did that effort do?

See next post for further explanation

The first WRB gap on the right (blue pointer 1) is evidence of supply coming in at the top of this previous uptrend.

It does take out some bullish bars to its left but by itself before knowing what happens next it is not a big deal. I would not have been surprised to see price move back up and take out this WRB gap (blue pointer 1) to the upside. Although we know what happens you have to ask yourself if this bar by itself is enough to consider selling its base. For me the answer would have been No.

When price tests the base of WRB blue pointer 1 price falls and takes out the base of the WRB gap green pointer 2. With this it is now clear that significant supply has reared its head. This would get me interested to start looking for sell opportunities.

Such opportunities can become manifest in various ways but I'll go into two for now. Both indicate sellers or supply exerting market control.

1. When effort is reversed or "swaps" these areas can be considered for entry. When price takes out green pointer WRB 2 this is an example of the effort being reversed (swap). Price then bumps off the base of green pointer WRB 1 and retests the swap presenting a trading opportunity. However one must also ask if the R:R is adequate. This can only be answered by the individual trader.



2. New bearish WRB gap bars. Notice blue pointer WRB 2. It takes out green pointer WRB gap bar 1. When price returns to the base of blue pointer WRB 2 another trading opportunity manifests. Again R:R is must be considered.

The blue rectangles are just depictions of sellers and buyers or supply and demand. Understanding what created them and the interaction overall is important.

WRB gaps are great indicators of who is controlling the market. In this case bearish WRB gaps showed the way and trading them was logical in this downtrend. When price turns it will often be signaled by the appearance of a WRB. Not always but often.

This is the current 3 minute EURUSD. I tend to trade 3 minute charts since I often trade NY open.

Notice how buyers/demand have been controlling.

Notice the purple arrows pointing to the large bullish WRB gaps. Also notice the red arrows pointing to the large bearish WRB gaps which was a possible indication of supply. However when price reached the base of the purple WRB gaps (more properly the cluster at the base) it held. As price "gapped" up notice how it ate away at the large peak (purple arrow on left and red arrows on right) and finally took out that entire structure. Interesting.

This thread is awesome, and I hope I have found a new home. I am a bit hesitant to post here because we do things differently. Please let me know if you would prefer that I do not post here. I'm okay with simply watching and learning in silence.

As I said, we do things differently. Therefore, I have to clear up a few things. And that really is my intent-to bring clarity, not criticism.

* There are two definitions of a WRB:

1. Wide Range Body (open to close).

2. Wide Range Bar (high to low).

I prefer to use candles, and therefore I when I say WRB, I mean a Wide Range Body (open to close).

Accordingly, a WRB would be an interval with a Body larger than the previous three (3) intervals (although any number three or greater can be used as long as the trader is consistent).

* I refer to the WRBgap by the term WRB HiddenGAP; which is the term used by Mark when the concept was originally presented.

* I refer to the Zone as a Supply/Demand Delta Zone because the zone created by the WRB HiddenGAP represents a key change in the Supply/Demand dynamic in the market. The other term I use, although rarely, is Entry Signal Zone. This bespeaks to the essence of the Zone concept: What you want to see WHERE you want to see it. From my perspective, a Zone is not a trade signal and one must see something in the zone to merit an entry. That something could be price action-based, indicator-based, time and sales (order flow)-based, or whatever.

I have just one question, what have happened to redsword ?

HG you are welcome to contribute and quite frankly I am honored that you would consider my journal a new home. It seems we have more in common than we differ.

This thread is not one where I intend to dictate rules so any variances in WRB definitions can be sorted out by those who find them of value.

I don’t consider myself a guru of any sort just one who has spent a lot of time observing and learning from others...including you HG. As u and others may have noticed I am a believer in median lines but have put that aside in this thread. I am a “student” of Shane Blankenship who has been a major contributor to my understanding of price action. Although he also uses median lines his understanding of price action separate from median lines is second to none.

Supply and demand for me is not really about drawing perfect zones but more about understanding who is in control of the market at any given time. This can be demonstrated on any time frame. Once u get this the trades really fall in your lap.

Anyway enough ranting. I look forward to your frequent posts here HG!!!

Dont know. I’ve even heard he passed but have never been able to confirm this. His legacy lives on but I think it’s better to move on.

Check this out anyone who cares to do so. Your comments and observations are welcome.

I'll comment later and explain.

This NZDUSD 3min chart shows price trending up. I changed the chart a bit adding another WRB.

-WRB gaps 1,2,3,4,5 and 6 are shown. These WRB gaps are the largest and most obvious.

-Also shown are price clusters or price coils prior to each WRB gap.

As a general rule price contracts and expands. WRB gaps should not be thought of in isolation. WRB gaps are not magical. They come from somewhere and this chart depicts that reality. WRBs stick out and thus are convenient to point out. They are tracks or footprints of the path of controlling buyers and sellers (supply/demand).

WRB gaps 1, 2 and 3 show buyers or demand controlling this uptrend. WRB gap 4 is the first bearish WRB gap. When it comes in we ask ourselves "what price action to the left did it take out?"

It takes out WRB gap 3 but that's it. Is it enough to consider the uptrend terminated?

WRB gap 5 occurs. Again "what price action to the left did it take out?" We can see it essentially takes out a small coil of bullish bars but it doesn't take out WRB gap 2.
The uptrend was led by bullish WRB gaps and so far bearish WRB gaps have not taken out significant structure to its left save for WRB gap 4 which took out WRB gap 3. WRB gap 5 falls into WRB gap 2. In the presence of the prior uptrend this is a reasonable trade consideration.

The purple vertical rectangle is a "stop loss bar" that measures from the WRB gap origin to a couple pips below the coil from which WRB gap 2 emanates. The blue vertical rectangle is a "profit bar" and is 3x the stop loss bar.

Why take such a trade?
1. The trend is strongly up
2. The bullish WRB gaps represent strong buyers and when it comes down to it I want to trade where the buyers are.
3. Supply or sellers thus far has not taken out significant structure to the left.
4. Finally the stop loss is small and a 3:1 profit is quite reasonable.

EURUSD 3 minute chart.

*Price has been trending up. Higher highs and higher lows. Price is considered to be trending up UNTIL a lower high and lower low swing can be identified. At some point I will post definitions of SWINGs.

*Note bullish WRBs vs bearish WRBs. The bearish WRB at the top of this up trend does not necessarily indicate the beginning of a new downtrend. Mark it and follow it and see what happens next.

USDCAD 3minute chart

*Supply level revealed by WRB, supply shelf with multiple hits and last supply level shown.

*Demand appears with WRB taking out supply shelf but bouncing off supply level.

*After bouncing off supply level price finds demand at WRB that took out supply shelf.

*Relative to your time frame supply/demand levels will be distant or recent. I view distant levels as important but I do not expect them to hold as supply or as demand. In this chart the top supply level is distant and price bounced off it but the recent demand level I viewed with more interest.

WRBs are valuable points of interest. They often signify the most important supply/demand levels. They aren't perfect like neither is anything else but studying them in the context of supply/demand is a worthy endeavor.

You're preaching to the choir. But don't stop. The Supply/Demand trading contingent took a hit today with the closure of C-12's thread.


If you post it, eventually they will come.

MNQ 3 minute chart for context

The micros provide those that can't afford the minis a reasonable opportunity to trade futures. However don't be fooled as one can quickly get underwater. Time based charts IMO seem to provide a bit more identifiable price action than tick charts. I like to get in and out with futures as I start looking at them around 7am NY. I prefer to enter after NY open. If I don't find an entry before lunch NY I usually walk away.

The green arrows show 3 bullish WRB gaps. These WRB gaps represent demand or buying effort. The top 2 bull WRB gaps gets taken out and price descends and finds support at the bottom bullish WRB gap. Also taken out is a bullish tail or pinball. Tails or pinbars represent effort and when they are taken out (effort reversed) they can provide opportunity. In this case the tail (shown by the grey arrow) was a bullish tail taken out to the downside (bull effort reversed). Price returns to this area and as can be seen it is unable to make a new high. Selling here is logical given the scenario.


There's much to learn in this chart and I've only highlighted a few things. Traditional supply/demand zones are not so important to me. More important is supply/demand that is evident in the price action. Sure I see zones but I never assume they will perform as previously. This is what I refer to as recent and distant. A distant area of supply/demand must prove itself whereas a recent indication of supply/demand in the proper context is something I will trade more readily.

Time frame is completely personal. There is no difference between PA on a monthly chart and a 2 minute chart. Price action is another thing I don't think many get. They say they trade using PA but are clueless. If one can explain what the individual bars/candles mean and how they relate to larger structures then I know they understand but if they can't then I know PA has eluded them. The problem many have with low time frames is keeping their stop losses and profit targets realistic. Oddly enough one of the absolutely most important aspects of trading is understanding risk. Most do not. It is why most can't trade profitably.

MGC 3 minute chart

The blue rectangle most would agree represents demand. However I would say it representED demand. I don't assume that this area will perform as demand if and when price engages it...no matter how juicy it looks. In the context of a 3 minute chart I consider this "zone" as distant.

The brownish-yellow rectangle highlights a "tail". It is not a single bar tail but multi-bar tail. When price took it out to the downside it represented a reversal of bullish effort. It actually represents a swap from demand to supply. Price however did not sufficiently test the tail for a sell. In other words the risk of selling was too high and the reward was not adequate too sell unless price would have risen higher.

The blue rectangle demand area is a large multi-bar gap. Markets tend to not leave such gaps untested so it will not be surprising in the least to see price descend into the blue rectangle. What happens next is the question.

Simple and nice explanations, I have subscribed to this thread, I am learning from you. Keep update your methods
Thanks