Price Action Powerhouse: Unveiling S&D vs. S&R for Smarter Trades | Forex Factory

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Price Action Powerhouse: Unveiling S&D vs. S&R for Smarter Trades

  • #1
  • First Post: Feb 18, 2024 8:35am Feb 18, 2024 8:35am
Charting Success with Price Action: Demystifying S&D and S&R for Profits


Welcome Traders, Price Action Enthusiasts, and Knowledge Seekers!

Are you ready to unlock the secrets of price action trading and take your analysis to the next level?
Join me as we delve into the dynamic duo of Support and Resistance (S&R) and Supply and Demand (S&D)!

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Whether you're a seasoned veteran or a curious newcomer, this forum is your gateway to mastering these powerful tools.
We'll explore the subtle distinctions between S&R's clear-cut levels and S&D's dynamic zones, and how they paint a comprehensive picture of market sentiment.

But knowledge is power only when shared!
This forum is all about collaboration and collective learning.
Share your trading experiences, unique insights, and burning questions about S&D and S&R.
Let's dissect real-world charts, uncover hidden patterns, and develop high-probability trading strategies together.

Remember, the path to trading mastery is paved with continuous learning and open discussion.
So, dive in, contribute your expertise, and let's enrich our understanding of price action trading like never before!

Here are some key prompts to spark our discussion:

  1. How do you differentiate between S&R and S&D in your analysis?
  2. Share your favorite techniques for identifying and utilizing each concept.
  3. What are some common pitfalls to avoid when using S&R and S&D?
  4. Can you showcase trade examples where S&R or S&D played a pivotal role?
  5. What other price action tools do you integrate with S&R and S&D?

I'm excited to embark on this journey with you!
Let's turn this forum into a treasure trove of price action knowledge and empower each other to become better, more informed traders.

I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #2
  • Edited 9:29am Feb 18, 2024 8:39am | Edited 9:29am
Quoting Whatevs
What's the difference between S&R and supply and demand or is it the same?
Nevermind... so what I basically put on the chart above is supply and demand zone while R and S are exact level (price). S&D zone and S&R exact level. I'll make a new forum probably, so I have to know what I'm talking about haha...
Today, we're addressing a thought-provoking question from our fellow trader Whatevs, who raised a valid concern about differentiating these concepts and their practical application.

This insightful query forms the foundation for our discussion.
Together, we'll explore the nuances of S&R vs. S&D, share strategies, and answer any questions you might have!

Whatevs,
I will answer to you in my next post.
Dont want to crowded here.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #3
  • Feb 18, 2024 8:43am Feb 18, 2024 8:43am
Quoting Whatevs
What's the difference between S&R and supply and demand or is it the same? Nevermind... so what I basically put on the chart above is supply and demand zone while R and S are exact level (price). S&D zone and S&R exact level. I'll make a new forum probably, so I have to know what I'm talking about haha...
Quoting Pat Chiko
{quote} Today, we're addressing a thought-provoking question from our fellow trader Whatevs, who raised a valid concern about differentiating these concepts and their practical application. [Quote the user's question here] This insightful query forms the foundation for our discussion. Together, we'll explore the nuances of S&R vs. S&D, share strategies, and answer any questions you might have! Whatevs, I will answer to you in my next post. Dont want to crowded here.
Whatevs
Back to your question.

While they seem similar, S&R (support and resistance) and supply and demand are distinct concepts in trading, although they are related.

Here's the breakdown:

Supply and Demand:
Focuses on the fundamental forces of willingness to sell (supply) and willingness to buy (demand) at different price points.
Identifies zones on the chart where there is an imbalance between supply and demand, indicating potential price reversals or continuations.
These zones are not specific price levels but rather areas where buy or sell orders tend to cluster.

Support and Resistance:
Represent specific price levels where the price has previously encountered difficulty moving past due to increased buying or selling pressure.
Support: Price level where buying pressure is expected to outweigh selling pressure, potentially halting a price decline and leading to a bounce.
Resistance: Price level where selling pressure is expected to outweigh buying pressure, potentially halting a price increase and leading to a pullback.
S&R levels are drawn based on past price action and represent potential areas of future support or resistance, but they are not guarantees.

Key Differences:
Specificity: S&R are specific price levels, while supply and demand are zones.
Focus: S&R focus on past price action, while supply and demand focus on underlying buying and selling forces.
Trading Application: S&R can be used for entry and exit points, while supply and demand zones can be used to identify potential reversal areas and overall trend direction.

Your Chart Interpretation:
Your statement about the chart is partially correct.
The supply and demand zones could refer to areas where price encountered buying or selling pressure, leading to potential reversals.

However, S&R levels should not be confused with exact boundaries of these zones.
S&R are distinct price levels within or near the supply and demand zones, where the price previously struggled to move beyond.

Ultimately, both S&R and supply and demand can be valuable tools for traders, but it's crucial to understand their differences and use them appropriately within your trading strategy.

If you need more I can can do charting for clarity.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #4
  • Feb 18, 2024 9:10am Feb 18, 2024 9:10am
Quoting Coreg2004
The most important knowledge to be a good forex trader is to understand Support & Resistance.
If you master this, you can understand any system (with or without indicator).
Find your own method to trade, everyone trades differently. If may find my system is not suitable for you. Stay with one system, no system hopping. A different system every week. The rule seems to be "If you get three losing trades in a row, then your system is no good. Time to go find another one." This is so sad because so...

As Coreg2004 rightly mentioned, a strong grasp of Support and Resistance (S&R) is crucial for effective Forex trading.
It forms a foundational tool that can be integrated into various trading systems, with or without indicators.

Their emphasis on finding a suitable personal method and avoiding system hopping resonates with many traders.
The constant search for the "Holy Grail" can be detrimental, and staying committed to a system allows you to fully understand and refine its nuances.

I hear you Bro : " While a system can provide structure, remembering that you are the trader controlling the decisions is equally important."

Thanks for your valuable posting.
Appreciate that.

PAT Chiko

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I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #5
  • Feb 18, 2024 9:18am Feb 18, 2024 9:18am
Support and Resistance Levels:

Think of a price chart where the price repeatedly bounces off a specific price level on its way down.
This level could be considered support, as buying pressure seems to increase there, preventing further declines. Similarly, a price level where the price consistently stalls on its way up could be resistance, indicating increased selling pressure at that point.
These S&R levels are specific price points derived from past price action.

Visualization Resources:

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Support and Resistance (S&R): nutshell

Support: Price level where buying pressure tends to outweigh selling pressure, potentially halting a decline and leading to a bounce.
Imagine it as a floor for the price.

Resistance: Price level where selling pressure tends to outweigh buying pressure, potentially halting an incline and leading to a pullback.
Think of it as a ceiling for the price.

Structure Holding:
When price bounces off support multiple times, it suggests the underlying structure (bullish sentiment) is holding, preventing further declines.
Conversely, when price reaches resistance repeatedly, it indicates the structure (bearish sentiment) is holding, limiting continued gains.

Remember:
S&R levels are not guarantees, only historical reference points.
Strong levels require multiple tests and volume confirmation.
Use them with other analysis for a comprehensive understanding.
This is how we concisely captures the essence of S&R and their connection to price structure.

Pat Chiko
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #6
  • Feb 18, 2024 9:35am Feb 18, 2024 9:35am
Supply and Demand Zone:

Imagine a price chart where the price makes a sharp upward move, followed by a period of consolidation before continuing up.
This consolidation area could represent a supply zone where sellers emerged to meet the initial buying pressure.

Conversely, a sharp downward move followed by consolidation could indicate a demand zone where buyers stepped in to absorb selling pressure.
These zones aren't precise lines, but rather areas of price concentration where significant buying or selling occurred.

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Supply and Demand in Trading: Simplified

Supply and Demand (S&D):
Represents areas on a chart where buying and selling pressure concentrate, suggesting potential price reversals or continuations.
Not specific price levels like S&R, but rather zones where orders tend to cluster.

Identifies 4 types:
Rally Based Rally (RBR): Strong buying leads to a price rise, followed by consolidation (demand zone).
Rally Based Drop (RBD): Selling emerges after a rally, halting the rise and potentially reversing it (supply zone).
Drop Based Drop (DBD): Selling pressure drives a price decline, followed by buying interest forming a support zone.
Drop Based Rally (DBR): Buying steps in after a drop, potentially reversing the downtrend (demand zone).

Remember:
S&D zones are indications, not guarantees.
Use them with other analysis for informed decisions.

Pat CHIKO
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #7
  • Feb 18, 2024 10:40am Feb 18, 2024 10:40am
Folks follow this thread if you want to succeed ...simples
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  • #8
  • Feb 18, 2024 10:56am Feb 18, 2024 10:56am
Next Step

We dive into the dynamic duo of Support and Resistance (S&R) and Supply and Demand (S&D), exploring their synergy in crafting high-probability trade setups. We'll go beyond theory and delve into practical implementation, empowering you to leverage these concepts for smarter trading decisions.

Remember, successful trading goes beyond strategy; flawless execution is paramount.
This includes precise entry and exit timing, optimal order types, and a deep understanding of market dynamics. While often overlooked, mastering execution can transform your trading journey.

Unlocking Synergy:
Now, let's unlock the power of combining S&R with S&D.
By understanding price behavior within zones and levels, we can identify high-probability entry and exit points, increasing our trading edge.

Practical Application:
Below, we'll dissect specific techniques for integrating S&R and S&D into your trading system.
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Building Skills in Reading Price Action and Market Context

Analyzing Supply and Demand Zones
Identifying and interpreting supply and demand zones is a skill that can be honed with practice.
These zones represent the price levels where the market has historically shown a significant reaction.
By analyzing past price movements and understanding the story they tell, you can anticipate future market behavior.
The key is to look for confluences - areas where multiple signals align, suggesting a stronger likelihood of a certain market movement.

On the above chart you can observe that price break the structure when price from the peak break the support (S&R)
Once it break the support, it create imbalance

Imbalances in the forex market are best used as a confluence for your trade setups and POI selection.
When we see a clear imbalance in price, it's safe to assume there is an institution manipulating price, or that we may potentially get a corrective pull-back at some point when price has become exhausted, and cannot continue to push in the same direction anymore. This is where price will go back filling up the imbalance at OB Supply zone.
With a clear price imbalance that forms after it, shows us that there is a clear inefficiency in price and within the market.
This means that we can look at the zone where the imbalance originated from and consider it as a higher probability level to look to take a trade from.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #9
  • Feb 18, 2024 11:56am Feb 18, 2024 11:56am
Quoting Pat Chiko
Next Step We dive into the dynamic duo of Support and Resistance (S&R) and Supply and Demand (S&D), exploring their synergy in crafting high-probability trade setups. This is where price will go back filling up the imbalance at OB Supply zone. With a clear price imbalance that forms after it, shows us that there is a clear inefficiency in price and within the market. This means that we can look at the zone where the imbalance originated from and consider it as a higher probability level to look to take a trade from.
We dive deeper getting into Point Of Interest (POI)

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Now let understand a bit deeper into Structure implication of Support & Resisntance:

When price breaks through a well-defined S&R level, it often signals a shift in the underlying trend.
A broken support suggests bears (sellers) are in control, potentially leading to further downside.
Conversely, a broken resistance indicates bulls (buyers) are gaining strength, hinting at a potential uptrend.

Remember (important) - Support: Price level where buying pressure tends to outweigh selling pressure, potentially halting a decline and leading to a bounce. Imagine it as a floor for the price. But once the SUPPORT break , the market shift towards the opposite direction in this case bear - based on S&R.


Now with the same chart we look into Supply and Demand (S&D):

Focus on imbalances: S&D zones identify areas where buying and selling pressure are concentrated but don't necessarily imply a trend shift.
Price can test and retest these zones multiple times before a clear direction emerges.

Multiple interpretations: Depending on the context (price action, volume, momentum indicators), a break of a S&D zone could suggest:
Trend continuation: If price breaks through with strong momentum, it might reinforce the prevailing trend.
Trend exhaustion: If price breaks weakly and quickly reverses, it could signal the end of the current trend.
False breakout: Price might just be testing the S&D zone before resuming its original direction.

We then seek for POI
Imbalances in the forex market are best used as a confluence for your trade setups and POI selection.
When we see a clear imbalance in price, it's safe to assume there is an institution manipulating price, or that we may potentially get a corrective pull-back at some point when price has become exhausted, and cannot continue to push in the same direction anymore

Looking for POIs with a clear price imbalance that forms after it, shows us that there is a clear inefficiency in price and within the market.
This means that we can look at the zone where the imbalance originated from and consider it as a higher probability level to look to take a trade from.
While not every zone with an imbalance will hold, this is a very powerful confluence that can be utilized to find good quality zones to analyze.

PAT Chiko.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #10
  • Feb 18, 2024 12:11pm Feb 18, 2024 12:11pm
Quoting Pat Chiko
{quote} We dive deeper getting into Point Of Interest (POI) {image} Now let understand a bit deeper into Structure implication of Support & Resisntance: When price breaks through a well-defined S&R level, it often signals a shift in the underlying trend. A broken support suggests bears (sellers) are in control, potentially leading to further downside. Conversely, a broken resistance indicates bulls (buyers) are gaining strength, hinting at a potential uptrend. Remember (important) - Support: Price level where buying pressure tends to outweigh selling...
Now before I move on, maybe some question here from readers.

Eg 1 of the question : Ahhhhhh. this is cheryy pick example, how do Pat knows price will go down like that. All this fake.

Eg 2, Hell no way pat know this is advance, he cherry pick based on hindsight. Prove it pat otherwise, we dont believe you.

Eg. 3 Stupid chart, how come Pat knows ,price will drop in advance even he claimed to be from the future.

Common throw you question. I just want you to SEE the market.
Limited time only before I start charging.

Need at least 10 question, if not I better stop here.

like a BOSS
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #11
  • Feb 18, 2024 12:40pm Feb 18, 2024 12:40pm
Hello Chiko,

Do you pay attention to the pase of price, like how it go to potential s/d zone?

Thanks
  • #12
  • Feb 18, 2024 12:52pm Feb 18, 2024 12:52pm
Quoting DmShka
Hello Chiko, Do you pay attention to the pase of price, like how it go to potential s/d zone? Thanks
Try to make details a little bit, what I mean:
1) First the red one, it's a good pase, the price moving surely to the zone;
2) The blue one moving ahhh a little bit moving up and down not surely;
So just curious your point of view to that, what better to do, choose red one or blue one?
Sorry for my english, it's bad))))
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  • #13
  • Feb 18, 2024 4:05pm Feb 18, 2024 4:05pm
Question 1: can we get explanations of what every acronym means? (FVG - fair value gap, OB - order block)

Question 2: how can we know where the real POI are? Are they Supply/Demand zones on the edges of FVG, that are also on HTF Support/Resistance lines?

Question 3: how should we trade in this situation (chart below)?

We have huge FVG's and S/R zones and S/D zones. Those zones are not in the same place. So what is more important here and how we should look for trade setups?

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  • #14
  • Feb 19, 2024 2:48am Feb 19, 2024 2:48am
Hey man
Nice to see you with a new lessons

First question is your question
Eg 1 of the question : Ahhhhhh. this is cheryy pick example, how do Pat knows price will go down like that. All this fake.

Second question
How do you enter in a trade? I know that you do not use LTF
This is my enter in Gold what do you think?

Reason of enter:
H4
1) Supply
2) The price has filled all the imbalance
3) Harami

Attachment G

Enter in M5 FVG

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3 question
How do you plan your TP?

4 question
Do not forget to speak about Money Management

See you thank you
  • #15
  • Feb 19, 2024 2:50am Feb 19, 2024 2:50am
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  • #16
  • Edited Feb 20, 2024 12:56am Feb 19, 2024 3:28am | Edited Feb 20, 2024 12:56am
I see a lot of synergy in what Pat does, to the way I map potential (for that is what it is) support/resistance. In order of potential importance (based on large-sample multi-year historical precedent,) I use repeating primary, secondary, and tertiary potential supp/res factors in that mapping, ie;

a. Previous fractal swing hi's and lo's are the primary factor.
b. Fib retraces, and Trend lines are the secondary factors
c. Calculated pivots, (Dly S1, Wkly R1 etc...) on Dly, Wkly and Mthly calculations, and Fib extensions are the tertiary factors.

I map out/mark-up these on the 1hr + charts and include any 30min stuff on that 1hr chart, but for potential sbr/rbs (support becomes resistance -and- resistance becomes support,) I do look for this as well on 5min+ charts, but do so manually by eye, if it might be coming into play. I then look for a confluence of these potential supp/res factors that might suggest that such a potential supp/res zone/factor (s) might see at least an initial bounce away from it/rejection, -as opposed to- an initial break-thru it. This confluence includes how many t/f's the primary factor exists upon. So for a eg a previous 1hr swing hi zone might also exist as a previous fractal swing hi zone on the 4hr, (and upwards t/f's.)

When price approaches a confluence I have marked, I have a number of repeating indicator-based set-ups/patterns that may suggest an initial rejection of such a zone is more probable than an initial break-thru it, and I look for price action confirmation to enter such a trade, as well as the confluence of these on t/f's above that of the one I am going to use as the trigger for entry in such a trade. This is almost always on a t/f below the one that the potential supp/res/sbr/rbs is marked upon.

It matters how price approaches a potential zone of supp/res/sbr/rbs and what it does when it gets there re PA, re clues as to the probability of whether price will initially break it, or bounce away from it.

Pat mentions the 'Rally-base-Rally / Rally-base-Drop / Drop-base-Drop, and Drop-base-Rally' phenomenons in his post above, and it's worth googling the Sam Seidon stuff on this. I know he is somewhat discredited now but that was more to do with how he marketed his stuff than the content, which is worthy of a look.

You can see examples of my charts over @ the Cable Update (GBPUSD) thread

EDIT: Found this ebook pdf in my files;
Attached File(s)
File Type: pdf 5 years of sam seiden supply and demand teaching.pdf   8.6 MB | 441 downloads
Trader with an Edge.
  • #17
  • Feb 19, 2024 4:30am Feb 19, 2024 4:30am
Hello Pat Chiko,
Heads up for new thread.

Quoting Pat Chiko
Strong levels require multiple tests and volume confirmation. Use them with other analysis for a comprehensive understanding. This is how we concisely captures the essence of S&R and their connection to price structure. Pat Chiko
Can you elaborate on volume confirmation and other analysis for a comprehensive understanding?
What volume do you use and how do you use it? Can you give example?
Appreciate.
The scent of a rose will always stay on the hand of the giver.
  • #18
  • Feb 21, 2024 3:49pm Feb 21, 2024 3:49pm
Thank you very much PAT for your generosity, several questions arise, if you would be so kind:

- S&R / S&D: do you have more specific rules to identify and draw them more precisely? If so, I guess it's better for everyone to experiment to find their own way of defining them. Right?

- In the graph of "We dive deeper getting into Point Of Interest (POI)" there is a POI, however it is above the "OB/Supply" and above "FVG-imbalance" which break the "LL-support" . Shouldn't the POI converge with the OB or the FVG?

- In the "Supply and Demand Zone" graphs I see more S&D zones, have you specifically drawn those because they are the only ones? Or was it just an example to explain?

Thank you very much in advance
newbie
  • #19
  • Feb 24, 2024 12:00am Feb 24, 2024 12:00am
Clear and insightful explanation. Your ability to articulate complex concept in simple way is remarkable, i think you should write a book about trading forex.
  • #20
  • Feb 25, 2024 8:30am Feb 25, 2024 8:30am
My view on USDCAD.
Price in a range. Both buyside and sellside liquidity are taken. There is no clear sign where price are willing to go. It is better not to trade in these conditions.
But this is my view.

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