Supply and demand in a nutshell by Alfonso Moreno | Page 29 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #561
  • Edited 8:08am Jul 19, 2013 7:29am | Edited 8:08am
You are welcome Boby, I appreciate your comments. I've cancelled my H1 short on the EURNZD. H1 pin candle with long tail, it's late on Friday, slow market of the day soon, end of the week, I'd better stay out at this time of the day in such types of trades. I prefer to plan the H4 supply higher at 1.6578, which has a nice departure. I shouldn't be trading on Friday afternoons though... will leave to the beach and won't do anything on the eurnzd till Monday. I have the nzdusd short which has a really nice departure and score for now.

Alfonso

Quoting bobyv87
Thanks! You realy do a good jobs with your webinaries and your explanation.
Set and Forget supply and demand trading community
  • #562
  • Jul 19, 2013 8:53am Jul 19, 2013 8:53am
The problem with h1 level is thaw was tested on m30
  • #563
  • Jul 19, 2013 11:17am Jul 19, 2013 11:17am
Well, if we look at the charts that way, we will have a few problems. Why? Because the lower timeframes wiill most likely show that a higher timeframe is not that fresh. If you don't see it on m30 you will then drill it down to m15 and then you will find the reaction you may be looking for.

We must have a timeframe where we look for levels, our entry timeframe, and decide if the level is good from that timeframe, not from a lower timeframe.

The level was not that good, h1 bullish pin bar.

Every situation is part of a learning process, luckily
Alfonso

Quoting bobyv87
The problem with h1 level is thaw was tested on m30
Set and Forget supply and demand trading community
  • #564
  • Jul 19, 2013 2:47pm Jul 19, 2013 2:47pm
Hi alfonso, I had a question about larger time frame S/D areas. My question is in regards to set and forget trades. If the Wk supply or demand areas are not original levels and the D1 S/D levels are NOT original, BUT the 4h has an Original level within the D1 S/D area would we take a swing trade. IF the Wk And D1 are not original, but the 4h is would we take them as swing trades, or does the Wk AND D1 have to be Original in order to take a 4h original level?
Thanks
  • #565
  • Jul 19, 2013 4:28pm Jul 19, 2013 4:28pm
This was my take on EURNZD

Weekly shows price is currently in top half of range however large pin bar rejection and strong up trend.
Attached Image (click to enlarge)
Click to Enlarge Name: 2013-07-19 eurnzd_1_wk.png Size: 108 KB


Daily shows price rose quite strongly off demand and broke up thru down trend line so demand in control.
After this rise price is likely to come down and retest trend line break so I went looking for LTF zones
Attached Image (click to enlarge)
Click to Enlarge Name: 2013-07-19 eurnzd_2_dly.png Size: 107 KB


H4 chart shows fresh SPB zone that is 90 pips wide so I went looking to H1 chart for narrower zone.
Attached Image (click to enlarge)
Click to Enlarge Name: 2013-07-19 eurnzd_3_h4.png Size: 113 KB


On H1 I found a level within the H4 area that is 33 pts wide so I used this to base my entry and stop from
Attached Image (click to enlarge)
Click to Enlarge Name: 2013-07-19 eurnzd_4_h1.png Size: 105 KB




This trade is working out but I'm wondering if the RR (profit margin H4 chart) and they way it left the area (H4 chart) were good enough or if I just got lucky this time.

I am unsure on how well I analysed the RR and departure. I'm trying to put together some solid rules for myself so please comment on these two points specifically.

Thx
If you act surprised, then you probably missed something
  • #566
  • Jul 20, 2013 12:45am Jul 20, 2013 12:45am
Hi Derek,

In regards to your question about larger S/D areas, this is what I do and think...

Quoting Sdprice
If the Wk supply or demand areas are not original levels and the D1 S/D levels are NOT original, BUT the 4h has an Original level within the D1 S/D area would we take a swing trade.
The WK and D1 SD levels do not have to be original in order to give you permission or validate a short on a H4 original level. You'd need an original D1 SD level IF you wanted to take a longer term position trade based on a Monthly curve for instance. The same applies to the WK SD level.

Remember this:

  1. The higher the timeframe the bigger its reliability, that is, the weekly timeframe is by nature a big timeframe, and these timeframes are very much respected, they hold better and more than lower timeframes. Big money and big market players are paying close attention to these levels, not to lower timeframe's M5 and M15 levels.
  2. If a D1/WK supply area is too used-up (many hits), then I will not look for H4 supply areas in the middle of that consolidation to lean on shorts, I will just pass on intermmediate levels (diddle in the middle) either trade the extreme H4 levels or wait for price to show me that there are willing sellers (brand new demand on H4) to short based on a confirmation type of trade
  3. The wisest thing to do is possibly doing nothing, set some kind of alerts on to alert you when the market has changed (a higher or price has been reached, meaning the consolidation has been broken), and just go to another currency pair to look for another trading opportunity

Hope this helps a bit! This is what I always do, because I see the logic and common sense behind it, nothing else.
Alfonso

Set and Forget supply and demand trading community
  • #567
  • Edited 1:42am Jul 20, 2013 1:28am | Edited 1:42am
Hi Peter,
Congratulations on your long EURNZD trade. As you could see, I was looking for a short instead of a long. That H4 demand area was overshot so I wanted to go short based on the WK distribution pattern formed right a fresh WK supply area, which you have also attached on your post.

My H1 speedbump was much too aggressive and I cancelled it, but I was thinking of a possible short at the first H4 supply area around 1.6575 because impulses are not to the down side, corrections are to the upside, H4 supply is being respected and H4 demand is beiong violated and/or overshot.

You based your entry on a fresh H4 speedbump zone, but the H4 was no longer in an uptrend, so speedbumps tend to fail a lot in such scenarios. Speedbumps are continuation patterns in the timeframe where they have been located, if used against the trend, they fail a lot. Many work, but the most likely outcome is either a loss or level being overshot (like the one you took).

Attached Image (click to enlarge)
Click to Enlarge Name: eurnzd_h4.png Size: 153 KB


It's also true that the D1 trendline has been broken with decision and that the fresh H4 speedbump demand area was right at the D1 trendline retest, as you show on your charts. I was basing my decision not on that H4 speedbump demand against
the H4 trend, but on the fact that:

1) the WK supply was in control with a distribution pattern right at a fresh WK speedbump supply
2) H4 was respecting supply and violating demand
3) Room to previous non-fresh D1 demand area

D1 CHART

The D1 is in a uptrend like you said, but what did price find on its way up? A fresh WK speedbump supply area, strong departure and profit margin. Price has been distributing in the are for a month and finally dropping.

When trending, EURNZD and most pairs, the D1 chart respects the D1 20 and 50 EMA really well (it also happens on H4 and H1 especially on EURNZD, EURAUD, GBPNZD). If there are H4/H1 SD levels in those zones and the pair is trending, these levels hold quite well. So your H4 long, even though a speedbump against the H4 trend has higher odds of working since it's in between the 20 and the 50 EMA. This is why I am using the 20 and 50 EMA, they are commonly used, and work well on trending markets as an odds enhancer, but entries are not based on the EMAs itself but on GOOD SD ZONES at or within them.

See the D1 chart attached.
Attached Image (click to enlarge)
Click to Enlarge Name: eurnzd_d1.png Size: 142 KB


WK CHART
See what is going on the WK chart, it's what I call a AD pattern (formerlly called P1 pattern, term original created by a couple of good friends of mine, to whom I give credit). I created an indicator to display where this consolidation patterns occur. It's a higher probability pattern when formed at higher timeframe areas. It's now called AD pattern because it's an Accummulation/Distribution (consodidation) pattern, what they call Stage 1 and 3. The indicator detects this kind of AD patterns and displays a red or green bar when it's active. When this happens at D1/WK/MN timeframes, price will most likely tend to retrace to its mean, or simply reverse, the area becoming a turning point.

Now take a look at the WK chart and look at the AD pattern, see what happened and where it happened.

  1. Surrounded by a red rectangle are the WK AD patterns that happened at a WK SD area
  2. Surrounded by a yellow rectangle are the WK AD patterns that did not happen at a WK SD area

See what happens on the WK chart...

Attached Image (click to enlarge)
Click to Enlarge Name: eurnzd_wk.png Size: 145 KB


In the future, I will try to explain this pattern in more detail in a video, it is a high odds pattern at higher timeframe SD areas.

Hope this helps!
Alfonso

Quoting outapips
This was my take on EURNZD Weekly shows price is currently in top half of range however large pin bar rejection and strong up trend.
Set and Forget supply and demand trading community
  • #568
  • Edited 10:04am Jul 20, 2013 8:41am | Edited 10:04am
I am planning a new supply & demand webinar for next Monday 22th July a few hours after London close. By doing it after London close, others will be able to attend that could not make it in the frist 2 webinars.

This time it will be exclusively live trading analysis, we'll be looking for H4 swing setups on a few pairs. By doing live trading analysis, we'll be able to go through the methodology step by step in a clearer way.

If you are interested, please send me a personal message with your email.
Those who have already sent me an email before, must have received an invitation already, so you don't need to send me any email, you are subscribed to the webinars.

Date: Monday 22th July
Time: 9:30 PM - 11:00 PM CEST (3 hours and a half after London Close)

I hope that time is not a problem, it's difficult to calculate correct time for all over the world. Gotowebinar will send a reminder email 1 hour before the webinar, that should do though.

Hope to see you there!
Alfonso
Set and Forget supply and demand trading community
  • #569
  • Jul 20, 2013 9:27am Jul 20, 2013 9:27am
Quoting panoramia
Hi Derek, In regards to your question about larger S/D areas, this is what I do and think... {quote} The WK and D1 SD levels do not have to be original in order to give you permission or validate a short on a H4 original level. You'd need an original D1 SD level IF you wanted to take a longer term position trade based on a Monthly curve for instance. The same applies to the WK SD level. Remember this: The higher the timeframe the bigger its reliability, that is, the weekly timeframe is by nature a big timeframe, and these timeframes are very much...

Thanks alfonso, you said, " You'd need an original D1 SD level IF you wanted to take a longer term position trade based on a Monthly curve for instancce." for this statement that you said, did you mean that if i look at the monthly for the curve then i should be looking at the D1 for the Entry position. In other words, if i want to trade off a D1 S/D i need to look at the monthly for the curve and then the D1 for the entry and the D1 has to be an original and fresh level? correct?

2nd question- so if the D1 is not original and the on the 4h chart WITHIN the D1 S/D is original: i can take the trade correct?
  • #570
  • Jul 20, 2013 9:29am Jul 20, 2013 9:29am
Quoting Sdprice
{quote} Thanks alfonso, you said, " You'd need an original D1 SD level IF you wanted to take a longer term position trade based on a Monthly curve for instancce." for this statement that you said, did you mean that if i look at the monthly for the curve then i should be looking at the D1 for the Entry position. In other words, if i want to trade off a D1 S/D i need to look at the monthly for the curve and then the D1 for the entry and the D1 has to be an original and fresh level? correct?
Yes, exactly Derek. If you want to base your entry on a D1 SD level entirely, I mean, using the whole D1 level as an entry, you need to have the Monthly as your curve. So, if you want to do a counter trend on the D1 SD area, you'd need it to be original and fresh, or wait for confirmation

Remember this relationship:
Curve timeframe: MN / WK / D1
Entry timeframe: D1 / H4 / H1

Quote
2nd question- so if the D1 is not original and the on the 4h chart WITHIN the D1 S/D is original: i can take the trade correct?

Yes, exactly. Correct.
Set and Forget supply and demand trading community
  • #571
  • Jul 22, 2013 4:29am Jul 22, 2013 4:29am
Hi Panoramia,

Is this normal that when I draw a rectangle on a certain Time frame and switch to another time frame and rectangle disapeared? Did you set the indicator to only show the rectangle on the TF we draw it?

I'd like to see my rectangles on every TF if it's possible for you to fix this for me please?

Thanks for you help!
  • #572
  • Jul 22, 2013 4:38am Jul 22, 2013 4:38am
http://www.forexfactory.com/showthread.php?t=428268

mfinab check this link
  • #573
  • Jul 22, 2013 4:53am Jul 22, 2013 4:53am
Quoting mfinab
Hi Panoramia, Is this normal that when I draw a rectangle on a certain Time frame and switch to another time frame and rectangle disapeared? Did you set the indicator to only show the rectangle on the TF we draw it? I'd like to see my rectangles on every TF if it's possible for you to fix this for me please? Thanks for you help!
The way the indicator is set, it will allow you to do top down analysis from weekly, daily & 4 hourly charts.

You can draw only 1 set of Supply & Demand rectangles on the weekly (where Alfonso decides the curve) and 2 sets of S&D rectangles on the daily & 4 hour.

When you view the charts on the timeframes where you drew the rectangles, you should still be able to see them, on the other timeframes these rectangles will be shown as 2 lines only. Maybe your background on your chart needs to be darker to see all the other info such as range & price levels.

Sometimes also, you could have another badly coded indicator on your chart that is deleting objects when you cahnge timeframes. Try the rectangle reader without any other indicators on your chart.
It never gets easier, you just get better
  • #574
  • Jul 22, 2013 4:53am Jul 22, 2013 4:53am
Quoting panoramia
Hi Peter, Congratulations on your long EURNZD trade. As you could see, I was looking for a short instead of a long. That H4 demand area was overshot so I wanted to go short based on the WK distribution pattern formed right a fresh WK supply area, which you have also attached on your post. My H1 speedbump was much too aggressive and I cancelled it, but I was thinking of a possible short at the first H4 supply area around 1.6575 because impulses are not to the down side, corrections are to the upside, H4 supply is being respected and H4 demand is...

Hi Alfonso,

Thanks for your explanation. I have a few areas that are causing me some confusion when I do my analysis and I guess this distribution phase is one that is causing me some trouble. Yes it would be great if you could cover this AD pattern at some stage in one of the webinars. Looking forward to the webinar.

Thx
If you act surprised, then you probably missed something
  • #575
  • Jul 22, 2013 5:08am Jul 22, 2013 5:08am
Hi Mfinab,

Other members already told you about it, thanks a lot for that

The rectangle reader/extender indicator works that way. You have to remove the indicator if you want to have the rectangles shown on all timeframes. But if you do it, you will lose all nice features that the indicator has to help you on your supply and demand trading.

Please, read the rectangle indicator documentation and watch the full video available in another thread I created. This will help you understand how powerful the rectangle extender indicator is for your SD trading.

The link is this: http://www.forexfactory.com/showthread.php?t=428268

Take your time to watch the video if you want to use the indicator.
Hope that helps!
Alfonso

Quoting mfinab
Hi Panoramia, Is this normal that when I draw a rectangle on a certain Time frame and switch to another time frame and rectangle disapeared? Did you set the indicator to only show the rectangle on the TF we draw it? I'd like to see my rectangles on every TF if it's possible for you to fix this for me please? Thanks for you help!
Set and Forget supply and demand trading community
  • #576
  • Jul 22, 2013 8:00am Jul 22, 2013 8:00am
Hi guys,


I'm very impressed of how fast you guys answered to my question. I very apprecitate that! This also telling me that you guys seems to be very active with this thread and system.
Looking forward to watch all your videos Alfonso.

I have one issue though, I live in New York Time zone, so I wont be able to apply the exact same rules as you do about when the daily candle close. As I dont trade full time and am sleeping at 12:00 AM. Maybe there is a different way I can use to apply the same technique as you guys?

Thanks again traders!
  • #577
  • Jul 22, 2013 8:04am Jul 22, 2013 8:04am
Hey Mfinab! (complex alias to write),

Why is the D1 close a problem for the strategy? We don't care when the D1 closes or not, we care about the supply and demand imbalances. We don't trade the D1 close or open, the D1 high or close, supply and demand is not about that.

The D1 or WK will tell you how close or far you are from the curve, how extended you are. We want to sell high and buy low, that's all. But we'll sell/buy on H4/H1, that's all. So why should we care about the candle closes? It's irrelevant.

By using set & foger on H4 timeframes, you can have a full time job and trade at the same time.

Trade what you see on your charts, that's all.

Alfonso

Quoting mfinab
Hi guys, I'm very impressed of how fast you guys answered to my question. I very apprecitate that! This also telling me that you guys seems to be very active with this thread and system. Looking forward to watch all your videos Alfonso. I have one issue though, I live in New York Time zone, so I wont be able to apply the exact same rules as you do about when the daily candle close. As I dont trade full time and am sleeping at 12:00 AM. Maybe there is a different way I can use to apply the same technique as you guys? Thanks again traders! ...
Set and Forget supply and demand trading community
  • #578
  • Jul 22, 2013 8:16am Jul 22, 2013 8:16am
Looking to go long on Silver (XAGUSD) at a H4 speedbump demand level after D1 supply has been broken.

You know I don't trade commodities live, I am taking only demo trades on metals and CFDs, need to practice a bit on those, spot silver/gold leverage is bigger in silver/gold, so taking it slowly.

H4 speedbump demand after D1 supply and resistance has been broken, room to reach WK supply.
Attached Image (click to enlarge)
Click to Enlarge Name: silver_h4.png Size: 120 KB


The D1 is making higher highs and new areas of demand.
Attached Image (click to enlarge)
Click to Enlarge Name: silver_d1.png Size: 73 KB
Set and Forget supply and demand trading community
  • #579
  • Jul 22, 2013 8:23am Jul 22, 2013 8:23am
Quoting panoramia
Hey Mfinab! (complex alias to write), Why is the D1 close a problem for the strategy? We don't care when the D1 closes or not, we care about the supply and demand imbalances. We don't trade the D1 close or open, the D1 high or close, supply and demand is not about that. The D1 or WK will tell you how close or far you are from the curve, how extended you are. We want to sell high and buy low, that's all. But we'll sell/buy on H4/H1, that's all. So why should we care about the candle closes? It's irrelevant. By using set & foger on H4 timeframes,...
Hi Panoramia,
OMG... lol, I messed up
Sorry about my nickname to be hard to write.
I was confused about another system I found on FF the other day. Nothing to do with this thread at all.

I totally agree with you about the way you think of supdem. I do actually trade the same technique and I found your indi very nice!

Thank you again Panoramia
  • #580
  • Jul 22, 2013 8:30am Jul 22, 2013 8:30am
Looking to go long on GOLD (XAUUSD) H4 demand area.

A few days ago a member was talking about going short on gold, in fact he went short and I guess he got a breakeven at least, he was Ochinkumar I believe, post is here: http://www.forexfactory.com/showthre...90#post6812290

We talked about it, it was not an original level of supply and I had taken a short before, so I was not going to lean on a short when that level was not original (counter trend on H4)... Now gold has broken D1 supply like Silver did. Dollar index has broken D1 demand area, so we could have a nice move up on Gold and Silver.

Planning the long on H4 demand respecting the H4 up trend at around 1295 (blue level). If price keeps on rallying higher without a retracement, creating risk/reward on the purple level, then I'd move the long entry at the purple level. But now the purple H4 speedbump does not have profit margin, so the trade is lower.
Attached Image (click to enlarge)
Click to Enlarge Name: gold_h4.png Size: 94 KB
Set and Forget supply and demand trading community
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