Supply and demand in a nutshell by Alfonso Moreno | Page 8 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #141
  • Jun 12, 2013 3:57am Jun 12, 2013 3:57am
One thing about how to validate a supply or a demand area. You will start seeing SD areas all over, even in your lunch, you will start drawing imaginary SD areas when looking at the buildings or your girlfriend/wife.

Here is a tip, which I believe is crucial for drawing correctly the SD zones. I use this always to validate a supply or a demand are on ANY timeframe.

1. A supply area will only be a supply area IF it makes a lower low and absorbs previous low (see screenshot)
2. A demand area will only be a demand area IF it makes a higher high and absorbs previous high, (imagine it the opposite way, make your grey matter work )

Hope this helps!
Alfonso
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 137 KB
Set and Forget supply and demand trading community
  • #142
  • Jun 12, 2013 4:30am Jun 12, 2013 4:30am
Quoting Sdprice
{quote} Hi mosah. I corrected my chart and thankyou for that info. so why do i have to do that for my chart: to place the rectangle on the Open candle of the blue and the high candle for the red(price decline). If i am on the D1 why would i start the rectangle at the open of the blue. I thought that is a different day, and that is just the Rally then to base then to drop. Question 1: where to place rectangle on that chart and the reason why to start it at the blue open candle? could you please explain this in detail. Question 2: Would you please...

Hi Sdprice,
I learned to do it this way.
I don't have an explanation why it must be like that.
  • #143
  • Jun 12, 2013 4:31am Jun 12, 2013 4:31am
You will see why it's like that on the video. Pity last nite it failed to save it, had technical problems. Will try it soon again!

Quoting mosah
{quote} Hi Sdprice, I learned to do it this way. I don't have an explanation why it must be like that.
Set and Forget supply and demand trading community
  • #144
  • Jun 12, 2013 12:02pm Jun 12, 2013 12:02pm
Sorry about the video! I know how hard you work, and I'm sure you packed a lot of thought into that video attempt. Everybody appreciates what you are doing though, as you can see from your replies. You know I do!
  • #145
  • Jun 12, 2013 2:30pm Jun 12, 2013 2:30pm
Looking at the D1 supply level of the Eur/Usd. I am trying to figure out if the D1 supply level would be considered a fresh level. It looks like a retracement of the previous supply level right above it. would the level that i have on the D1 be considered fresh or a level at all. The only reason i would think it would hold woud be because it is on the D1 and has more weight or supplier at that level?
What would do you think panoramia and mosah?
Attached Image (click to enlarge)
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  • #146
  • Edited Jun 13, 2013 2:11am Jun 12, 2013 3:03pm | Edited Jun 13, 2013 2:11am
This is the typical Level on top of level scenario. The upper level is higher odds, because price has to absorb most buyers in the lower zone before reaching the upper one.

I will not set & forget in these kind of zones, UNLESS there is an authentic/original H1/H4 supply level, that is, a level that is not a reaction to a previous level. If I find a good level in any of those areas, I will go short, else I will wait for confirmation in the form of a brand new H1/H4 supply level that absorbs previous demand. But preferably, we should trade at the upper level in case of a Level on top of level scenario.

The upper level is within the WK supply zone, and a Monthly zone (even though it's not fresh but very wide) so the upper one has higher odds, but it does not mean that price will reach it now.

It's all a big zone with many levels on top of levels on the D1 chart, within the WK supply area. In this scenerio I will lean on really good fresh original levels or wait for the reaction to happen and trade the pullbacks, that is, confirmation that there are willing sellers in the zone. But which zone? The institutions will let you know when they are selling by forming brand new H1/H4 supply levels.

See my D1 chart here:
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 160 KB


H4 chart 1:
See the zones that we have. We have new demand zones basing below the lower D1 supply, upper is purple because it's a level I don't trust because it's too high or low, but I want to see it's a level that made a higher high. There could be a level to short, 20 pips wide, within the D1 supply, right at the distal line. I will show origin on the next chart.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot4.png Size: 134 KB


H4 chart 2 (origin of the drop within the D1 supply zone):
There is a 20 pips fresh H4 supply level right at the distal line of D1 supply zone. It's original (no reaction to any previous level, and it's fresh (price didn't pullback into it yet).

I will go counter trend only if I can find a level which is both original and fresh, else I will wait for brand new H1/H4 levels to be formed when price reacts to the area, if it does. I've cancelled the order for the reasons below.

Attached Image (click to enlarge)
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UPDATE: I had set a limit sell order right at that H4 supply area for all of these reasons, but I've cancelled it because I want to follow my rules, it's better to wait for the top of the top, OR wait for brand new supply are to be formed and trade the pullback. Euro is strong and both $index and usdchf have room to D1 demand, so price might penatrate even further up. H4 has been basing forming 2 consecutive speedbump demand areas as well.

If price does not want to penetrate the zone, then if there is a brand new H1 supply zone formed, I will lean on it to go short

H1 chart:
Before the H4 supply at the top (previous chart), we can find this H1 supply level, it's a speedbump, drop-base-drop. I will not use a speedbump to go counter-trend, I only will use valleys and peaks (swings), unless price hits the area and drops forming a new supply level to lean on for shorts.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot3.png Size: 125 KB


D1 AND WK CURVE
Look at what my SD spreadsheet is telling me, EURUSD is 92.4% high in the D1 curve, and 64% high in the weekly curve. So we should be looking for good areas to short, either fresh and original historic areas with a big imbalance OR brand new supply areas formed when dropping from the level
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot6.png Size: 189 KB


Quoting Sdprice
Looking at the D1 supply level of the Eur/Usd. I am trying to figure out if the D1 supply level would be considered a fresh level. It looks like a retracement of the previous supply level right above it. would the level that i have on the D1 be considered fresh or a level at all. The only reason i would think it would hold woud be because it is on the D1 and has more weight or supplier at that level? What would do you think panoramia and mosah? {image}
Set and Forget supply and demand trading community
  • #147
  • Jun 12, 2013 4:34pm Jun 12, 2013 4:34pm
Quoting panoramia
This is crazy I spent 1 full hour recording with Camtasia a nice video on levels, how to draw them and how to filter them out... after I pressed stop it said there were not enough resources to save it, crazy... 1 full hour lost, and the video was really nice, I was very happy about it... I quit for now.. It drained my energy for some days, sorry Technology sucks! Things don't work when they have to. I have 8 gigabytes ram, nice SDD hard drive, but the problem is that I have Windows, the biggest virus ever! Sorry! Alfonso

NOOOO! I feel for you man. Was so looking forward to that video as well - as im sure we all were. I hope you decide to re-record again soon Alfonso.
Your thread is the best thing online as far as im concerned mate.
  • #148
  • Jun 12, 2013 11:02pm Jun 12, 2013 11:02pm
Attached Image (click to enlarge)
Click to Enlarge Name: JPY 6.11 Short #1.JPG Size: 106 KB


In keeping with Alfonso's longer term theme of this thread, we got short a 2 lot.

Attached Image (click to enlarge)
Click to Enlarge Name: JPY 6.11 Short #2.JPG Size: 100 KB


Hot our TP and kept going.

Attached Image (click to enlarge)
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4HR view. Trend is down.

Attached Image (click to enlarge)
Click to Enlarge Name: JPY 6.11 Short #4.JPG Size: 99 KB


The Daily.. We can see why this would be the obvious trade. I call these trades "Magnet Trades" ( my way of defining the higher probability direction ) Many times these major areas of S/D act like price magnet.. drawing price to them. As we can see, price is heading toward the Daily Demand with good momentum. Let's hope it continues into the Level. You will also notice that we have a BIG round number sitting inside our demand Level.. 93.00. We could see a solid bounce as the overall price trend is up since Nov 2012. If you left back to 2008, 2009, 2010 you will see how price has used the 93.00 "AREA" as a S/R. This move into Demand may be a retest of that area??

Total pipage for this short 120 pips plus

TSD
  • #149
  • Edited 1:44pm Jun 13, 2013 4:56am | Edited 1:44pm
I've created a small 25 minutes video on How to Draw Supply and demand Levels. It's a very mechanical, consistent and robotic way of drawing the levels the same way over and over and over.

Consistency is key to success in any field of life, trading is not an exception.

I've read some posts from other traders asking how to draw a level, why to use the closes or the highs, etc. This video will solve all of those doubts. Hopefully you will not have any more doubts as to how to draw them in a mechanical and consistent way.

IMPORTANT: you will see SD levels everywhere. Most will not work, you need to have rules to filter them out. We'll cover them one by one in the next videos, like going with the trend, using speedbumps (continuation patterns) with trending markets, using original and fresh levels, selling high in the D1/WK curve and buying low in the D1/WK curve, etc.... if my dog allows me

Enjoy it, my sexy voice and my dog's barks
Alfonso

Inserted Video
Set and Forget supply and demand trading community
  • #150
  • Jun 13, 2013 5:48am Jun 13, 2013 5:48am
Quoting panoramia
I've created a small 25 minutes video on How to Draw Supply and demand Levels. It's a very mechanical and robotic way of drawing the levels the same way over and over and over. I've read some posts from other traders asking how to draw a level, why to use the closes or the highs, etc. This video will solve all of those doubts. Hopefully you will not have any more doubts as to how to draw them in a mechanical and consistent way. IMPORTANT: you will see SD levels everywhere. Most will not work, you need to have rules to filter them out. We'll cover...
Hi Panoramia,
Thank you for that video.
¡muchas gracias
  • #151
  • Jun 13, 2013 7:21am Jun 13, 2013 7:21am
Quoting panoramia
I've created a small 25 minutes video on How to Draw Supply and demand Levels. It's a very mechanical and robotic way of drawing the levels the same way over and over and over. I've read some posts from other traders asking how to draw a level, why to use the closes or the highs, etc. This video will solve all of those doubts. Hopefully you will not have any more doubts as to how to draw them in a mechanical and consistent way. IMPORTANT: you will see SD levels everywhere. Most will not work, you need to have rules to filter them out. We'll cover...

Thanks for your very good video. I have a question regarding mt4 history available from the broker. Sometimes in order to draw more precise zone we need to scale from D1 in to lower TF like H4, h1 or even m30 and the only available history in Mt4 is D1 or H4. Unfortunatey there is missing even h4 for the periods from the past not saying H1 or m30... I tried to download using history center from "MetaQuotes Software corp" but after I did there is a lot of gaps. I tried also download it from this link http://www.forextester.com/data/datasources.html but don't know how to convert it to particular TF . Do you know what to do in order to get most complete Mt4 history for lower time TFs?
  • #152
  • Jun 13, 2013 7:55am Jun 13, 2013 7:55am
Hi Panoramia

Really good video, well explained!

Many thanks

mickey
  • #153
  • Jun 13, 2013 7:59am Jun 13, 2013 7:59am
Thanks for your compliment, glad that you liked the video!


As far as MT history is related, it all depends on your broker, nothing else. Mine has nice history back some years on H4 on most pairs, not that much on H1. But that's the way it's. You need to find brokers that allow you to have a nice history. If your live one does not, look for one on Demo and use the demo one for analysis only.


Hope that helps!
Alfonso

Quoting Amcee
{quote} Thanks for your very good video. I have a question regarding mt4 history available from the broker. Sometimes in order to draw more precise zone we need to scale from D1 in to lower TF like H4, h1 or even m30 and the only available history in Mt4 is D1 or H4. Unfortunatey there is missing even h4 for the periods from the past not saying H1 or m30... I tried to download using history center from "MetaQuotes Software corp" but after I did there is a lot of gaps. I tried also download it from this link http://www.forextester.com/data/datasources.html...
Set and Forget supply and demand trading community
  • #154
  • Jun 13, 2013 8:44am Jun 13, 2013 8:44am
Quoting panoramia
Thanks for your compliment, glad that you liked the video! As far as MT history is related, it all depends on your broker, nothing else. Mine has nice history back some years on H4 on most pairs, not that much on H1. But that's the way it's. You need to find brokers that allow you to have a nice history. If your live one does not, look for one on Demo and use the demo one for analysis only. Hope that helps! Alfonso {quote}

Thanks for reply. I will download demo than.
  • #155
  • Jun 13, 2013 10:24am Jun 13, 2013 10:24am
Quoting panoramia
I've created a small 25 minutes video on How to Draw Supply and demand Levels. It's a very mechanical and robotic way of drawing the levels the same way over and over and over.
Great Video Alfonso - thankyou.
Cant wait for the next one !
  • #156
  • Jun 13, 2013 2:27pm Jun 13, 2013 2:27pm
This trade worked nicely shorting the GBP/CAD at 1.60200 last night. roughly 3:1. Thanks alfonso for the video; helps a lot.
Attached Image (click to enlarge)
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  • #157
  • Jun 13, 2013 2:28pm Jun 13, 2013 2:28pm
I've recorded a 45m video, this time is about a very very important matter. This time is a bit longer because I had too many things to talk about, you will not get bored, I believe everything said is key to understanding S/D trading. I'm a swing trader mostly, so I will not use M15 or lower timeframes to look for levels to trade or where exactly the decision was made to break a level and so on.

The same applies to lower timeframes if you are a scalper, since price is fractal.


The video decribes in detail:

1. The 2 types of supply and demand levels
2. Detailed definition and examples of fresh levels and original (authentic) levels
3. When and how to use fresh and original levels, and when not to use them
4. What is a good base, how continuation patterns (speedbumps) look like, number of candles that are best and what patterns to avoid on the basings

We have 2 types of levels:

1. Valleys and Peaks. Rally-Base-Drop / Drop-Base-Rally. Turning points. Best at extremes
2. Speedbumps. Rally-Base-Rally / Drop-Base-Drop. Continuation patterns, best with trending markets

Inserted Video
Set and Forget supply and demand trading community
  • #158
  • Jun 13, 2013 3:07pm Jun 13, 2013 3:07pm
Thanks for the videos! There is a lot of good info here! Keep it up!
  • #159
  • Jun 13, 2013 3:48pm Jun 13, 2013 3:48pm
Hi Panoramia

Excellent video, my understanding is growing!

Many thanks

mickey
  • #160
  • Jun 13, 2013 4:00pm Jun 13, 2013 4:00pm
IS this supply level fresh. it made a new high; broke higher than the supply level before it, so would this be considered fresh if it breaks supply level to the left and before it. Thanks
Attached Image (click to enlarge)
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