Supply and demand in a nutshell by Alfonso Moreno | Page 62 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #1,221
  • Aug 20, 2013 12:40pm Aug 20, 2013 12:40pm
EURGBP chart with the proper rectangles.


Does the blue demand zone count as demand to place longs? It is only 4 pips wide.


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  • #1,222
  • Aug 20, 2013 2:43pm Aug 20, 2013 2:43pm
Excellent, excellent thread - thank you for your time and knowledge. Sam Seiden free videos were one of my first introductions into trading, and its always stuck with me. However, I gravitated more towards scalping and continue to do so from a 1 tick chart. However, a methodical, and more importantly, a logical, larger time frame trading method has always been an interest of mine. I met a trader once who could cycle through the time frames, using supply and demand from 1, 5, and 30 minute charts, mixing scalping to swinging to position trading, entering from 1 minute charts for trades that turn into month long holds. Anyway, I really appreciate the work that's gone into this thread -

On that note, I was hoping to get some thoughts on the attached EU charts. This morning I shorted the zone in the first chart, just as a scalp. And then after my session started looking a bit more at the big picture. It seems that what I may have drawn as that top supply zone is incorrect - it:

a) comes from a doji base, which I see may not actually be a base, and
b) appears to be a first test of the zone just above it, drawn in the second chart.

Often I find that what I see initially as a supply/demand zone is, ultimately is just a test of a previous higher/lower S/D zone. I guess my question is, do the rejections from a S/D zone ultimately turn into their own S/D zone? I think the answer is probably that the initial zone is the actual zone to work from, and this is important because it maintains the integrity of the price history in having already tested that zone once.

[Note: the top zone is drawn from the wick because I can't get 4 hour data going back that far and otherwise the zone would be very wide. But this goes back to my question. That top zone is most likely a test of a zone above it on a higher time frame, so is it even a valid zone? My mind is running in circles...]

Thanks for the ideas -
Attached Image(s) (click to enlarge)
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Small disciplines repeated with consistency lead to great achievements.
  • #1,223
  • Aug 20, 2013 6:34pm Aug 20, 2013 6:34pm
Quoting panoramia
Hello Ted, Thanks for sharing your levels on USDJPY. Just one thing, VERY important. You are not taking into account how fresh or original levels are! My recommendation would be this: What the video on the 1st post on how to draw original and fresh levels again (maybe you haven't watched it). This video is KEY to understanding supply and demand Delete the previous post and draw the levels again Post the new analysis on the USDJPY, only after you have understood what that video explains Most of the levels are reaction to previous levels and you didn't...

Ok Alfonso, I have watched the video again and went through and redrawn all of my levels from a fresh chart. After doing so i checked my four hour against yours, there are some levels you have that i dont but i was more worried about levels closest to price, any way no more excuses here are my updated charts thank you for your opinion it means a lot to me.
Thanks Ted

Oh i do have 1 question (might be obvious to most); If a price is testing a level can it become a supply (or demand) level also? see monthly

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There is a little time delay in my charts I started them last night and finished today, Sorry
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  • #1,224
  • Aug 20, 2013 6:52pm Aug 20, 2013 6:52pm
Quoting jmflukeiii
Excellent, excellent thread - thank you for your time and knowledge. Sam Seiden free videos were one of my first introductions into trading, and its always stuck with me. However, I gravitated more towards scalping and continue to do so from a 1 tick chart. However, a methodical, and more importantly, a logical, larger time frame trading method has always been an interest of mine. I met a trader once who could cycle through the time frames, using supply and demand from 1, 5, and 30 minute charts, mixing scalping to swinging to position trading,...
One thing you just found out is that many things in the market are a reaction from something else in the market - in my experience a zone formed when interacting with another one is perfectly valid despite what some may say. If you look close enough often you'll find some cause for an area to form, just from a lower frame. Have a look at the EU weekly chart highs for an example.
  • #1,225
  • Aug 20, 2013 8:06pm Aug 20, 2013 8:06pm
Quoting Kanzler
{quote} One thing you just found out is that many things in the market are a reaction from something else in the market - in my experience a zone formed when interacting with another one is perfectly valid despite what some may say. If you look close enough often you'll find some cause for an area to form, just from a lower frame. Have a look at the EU weekly chart highs for an example.
Thanks Kanzler - I appreciate the response. I was reading another thread with a much different approach, but the creator put it in an interesting way. The market is a chess game - you've got obvious supply zones above and demand zones below from all different time frames, and then zones beyond those zones, all representing areas where obviously somone or many somones were trying to take a position and are now possibly waiting to take a position when price returns. The question is, which zones will the market go back to fill orders at, and which zones will the market move through in order to do so. Otherwise we would have been an in an ever-tightening triangle - which is funny because that is somewhat what the EU weekly looks like!

Its all very interesting and perhaps I'm over-complicating it a little in my mind, but nonetheless, I have always had troubles with indicators because it doesn't tell me the why. Viewing the market this way explains why.
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Small disciplines repeated with consistency lead to great achievements.
  • #1,226
  • Aug 20, 2013 8:45pm Aug 20, 2013 8:45pm
Quoting Kanzler
{quote} One thing you just found out is that many things in the market are a reaction from something else in the market - in my experience a zone formed when interacting with another one is perfectly valid despite what some may say. If you look close enough often you'll find some cause for an area to form, just from a lower frame. Have a look at the EU weekly chart highs for an example.
In my opinion, it is only logical that zones, that are reactions from other zones, are valid, only IF they proceed to take out/have enough momentum to take out another level. This is also in line with our rules, so I agree.
  • #1,227
  • Aug 20, 2013 8:57pm Aug 20, 2013 8:57pm
Quoting Axlz
{quote} In my opinion, it is only logical that zones, that are reactions from other zones, are valid, only IF they proceed to take out/have enough momentum to take out another level. This is also in line with our rules, so I agree.
I just think almost everything can be a reaction from another level if you look hard enough, but in general I agree with the engulfing thing.
  • #1,228
  • Aug 21, 2013 1:30am Aug 21, 2013 1:30am
Hello traders. Does anybody know where and how to download the rectangle indicator into MT5 platform? Thank you.
Enter Signature
  • #1,229
  • Aug 21, 2013 2:38am Aug 21, 2013 2:38am
Hi Sebastian!
Congratulations on adding up to your position. It was a valid new area of supply, so it was the right thing to do. We had talked about it on the Webinar I believe, and you did it. I did what I talked as well, so I am short there. I see you placed your SL right above the previous candle high on the H4 speedbump, that's what I do always if I see such a configuration as I explained in a previous post.

Still not at breakeven, but it is a valid setup. Let's see what happens!

I believe you are doing a great job Sebastian! Congratulations again!
Alfonso
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Quoting sebkor6
{quote} I added 1 more position on h4 supply zone {image}
Set and Forget supply and demand trading community
  • #1,230
  • Aug 21, 2013 2:41am Aug 21, 2013 2:41am
Hello there!
Both the rectangle extender indicator and the supply demand indicator are for Metatrader 4, they won't load on MT5, sorry. MT5 changed the coding language and indicators need to be redone on that platform. Few people using it, it will take some time for people to move to it.

So for now, the indicators are not available under MT5, at least the one I created, the rectangle reader/extender. The automatic one created by insanities industries (also in first post) is no longer supported, so it won't be converted to MT5, unless someone out there does it. I won't do that because I don't need to, you know what I mean. I am working with MT4, so no need!

Hope that helps!
Alfonso

Quoting empresswa29
Hello traders. Does anybody know where and how to download the rectangle indicator into MT5 platform? Thank you.
Set and Forget supply and demand trading community
  • #1,231
  • Aug 21, 2013 2:59am Aug 21, 2013 2:59am
I've been looking to short NZDUSD but no single opportunity on H4, not even on H1. Have a trade setup to short at 0.7977 right below the last H4 supply zone after the absorption of previous demand. The trade is not seen, but it's there sitting on my VPS, this is the way I am going to work from now on, they are virtual pending orders based on certain conditions.

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As you can see, not even on H1 was there an opportunity to short. Now waiting for 0.7932 to short, the previous supply area that broke support on the left.
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Alfonso
Set and Forget supply and demand trading community
  • #1,232
  • Aug 21, 2013 3:01am Aug 21, 2013 3:01am
Hello Panoramia,, i came across this thread by chance and boy i am glad i did. i like the way you analyse and teach. i've been trading for almost 3 years using harmonic patterns. i believe that knowing and understanding Supply/Demand , Support/ Resistance and Price Action is very very essential in trading. i am still on the first page of this thread going through the various videos and would like to know how often you do webinars and if there is a link to it?
Thank you for all the good work
  • #1,233
  • Aug 21, 2013 3:09am Aug 21, 2013 3:09am
The same idea applies for a H4 short on AUDUSD. Even though we are at monthly demand zone, it's a speedbump demand against the trend. It looks like price wants to penetrate the Monthly demand further, at least to the support area. I had a H4 short at 0.9103 but I missed it by a couple of pips I believe.

Now I have a limit sell order on the H4 supply area that was created after that, right at 0.9071.

Alfonso
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Set and Forget supply and demand trading community
  • #1,234
  • Aug 21, 2013 3:13am Aug 21, 2013 3:13am
Welcome to the thread Georji!

I'm glad that you found us, I believe it's gonna be great to have you around!
There is no web site for the webinars, you can send me a private message with your email over Forex Factory, or you can fill out the form on my personal photography site at http://www.panoramia.net/visitas_vir...panoramica_360

Once you do that, I will manually add you to the webinar's list. There is a webinar normally once every 1 or 2 weeks. It all depends on where I am located at the moment and my location. Trading on set & forget allows me to be or go anywhere and let my EA and VPS do the work for me!

Alfonso

Quoting Georji
Hello Panoramia,, i came across this thread by chance and boy i am glad i did. i like the way you analyse and teach. i've been trading for almost 3 years using harmonic patterns. i believe that knowing and understanding Supply/Demand , Support/ Resistance and Price Action is very very essential in trading. i am still on the first page of this thread going through the various videos and would like to know how often you do webinars and if there is a link to it? Thank you for all the good work
Set and Forget supply and demand trading community
  • #1,235
  • Aug 21, 2013 3:28am Aug 21, 2013 3:28am
I just realized that yesterday I was triggered on a short on Russell 2000 index. This is my very first trade on Russell 2000 index. My new broker has some CFDs, and I'm doing some live trading on the opportunities that I see. New on indexes and CFDs, need to get the feeling.

This trade was a H4 speedbump supply. There was a level on top of a level, I took the top one for my entry since the lower one was like a sort of reaction to the lower basing area of top one. I am not being very greedy on my TP as you can see.

I had a limit order on the previous H4 supply area at the top, but price never reached it, pity!

Let's see if this trade wants to work for me!
Alfonso
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Set and Forget supply and demand trading community
  • #1,236
  • Aug 21, 2013 3:34am Aug 21, 2013 3:34am
EURGBP.

Price bounced off a 4 PIP demand area on the 1h !!!

Amazing trade if you had taken that. I didn't, as news was about to be released, and those 4 pips would easily be taken out if it went against me.

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  • #1,237
  • Aug 21, 2013 3:38am Aug 21, 2013 3:38am
Alfonso,

I remember you said that you don't like entering on candles that have small bodies and large wicks, but on some pictures, I see you entering trades on them.

Is that ok for us to do, unless they're very obvious, like a doji?
  • #1,238
  • Aug 21, 2013 3:39am Aug 21, 2013 3:39am
I was waiting for to go long at lower H4 speedbump area on EURNZD, but price never pulled back.

Now price has formed a brand new H4 speedbump with nice profit margin and departure, great for a long as long as the weekly supply area at the top is not reached first. I do have a limit buy order at 1.6822 on my VPS

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I just wanted to point out that drawing this H4 ascending trendline IS NOT POSSIBLE. We need 2 obvious valleys in order to draw it. In this scenario we don't draw TLs, we just take all levels we find if they are speedbumps and higher timeframe has not been reached or it's too close to current price. So right now the level at 1.6821 is valid.

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Alfonso
Set and Forget supply and demand trading community
  • #1,239
  • Aug 21, 2013 3:42am Aug 21, 2013 3:42am
Hello Axlz!

I don't like a single doji candle on a speedbump, that's not a good signal. But if there is a doji or wann be doji on the basing together with other candles, it's fine with me. If that area is an important are that caused the absorption of previous supply or demand, even better! There are many small nuances that only screen time and "experience" (screen time again) can tell you. But everything in life is like that, you know what I mean. Trading is not an exception.

Hope that helps!
Alfonso

Quoting Axlz
Alfonso, I remember you said that you don't like entering on candles that have small bodies and large wicks, but on some pictures, I see you entering trades on them. Is that ok for us to do, unless they're very obvious, like a doji?
Set and Forget supply and demand trading community
  • #1,240
  • Aug 21, 2013 3:49am Aug 21, 2013 3:49am
Hi Axlz!
Why didn't you take that trage on EURGBP? If it was a valid setup, why didn't u? EURGBP is not on my pairs list, it was but now it's not, so I didn't see that trade.

If the level is 4 pips wide, what is the problem? That's even better. EURGBP does not have much volatility and levels are normally pretty small even on H4. In the end, since our mind tends to intervene too much, we manage to choose the levels that don't work out and skip the ones that do work! Is there a good Houston neurologist that can work on those issues on all of us (me included?


Alfonso

Quoting Axlz
EURGBP. Price bounced off a 4 PIP demand area on the 1h !!! Amazing trade if you had taken that. I didn't, as news was about to be released, and those 4 pips would easily be taken out if it went against me. {image}
Set and Forget supply and demand trading community
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