Supply and demand in a nutshell by Alfonso Moreno | Page 77 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #1,521
  • Aug 28, 2013 12:38am Aug 28, 2013 12:38am
Quoting sebkor6
{quote} Hi, I think that we should be carefull with aud usd. Price didn't quite reach daily demand level at 0.89250. {image}
You were correct.

It has hit it now. Now to wait and see what happens. If it starts violating supply zones on the 1h, time to look for longs. If not, then we must wait even longer, as there is a demand zone right underneath the current one in control.

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  • #1,522
  • Aug 28, 2013 12:44am Aug 28, 2013 12:44am
Silver just broke through daily supply.

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We have room till the next weekly supply.


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Time for longs?
  • #1,523
  • Aug 28, 2013 1:15am Aug 28, 2013 1:15am
Quoting Axlz
Silver just broke through daily supply. {image} We have room till the next weekly supply. {image} Time for longs?
Yes, definitely. Same on gold. Now we can look for longs
  • #1,524
  • Aug 28, 2013 1:47am Aug 28, 2013 1:47am
Quoting sebkor6
{quote} Yes, definitely. Same on gold. Now we can look for longs
What do you think of this demand level on silver 1h?

Its extremely small. So small that I doubt it could be considered a valid area for demand. Or could it?


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  • #1,525
  • Aug 28, 2013 1:49am Aug 28, 2013 1:49am
Stopped out on USDCAD.

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  • #1,526
  • Aug 28, 2013 1:50am Aug 28, 2013 1:50am
Quoting sebkor6
{quote} Yes, definitely. Same on gold. Now we can look for longs
It looks like our SD analysis on Gold was correct and that Weekly supply was not good for set & forget shorts! Nice! Now it's time to look for longs!

Alfonso
Set and Forget supply and demand trading community
  • #1,527
  • Aug 28, 2013 1:57am Aug 28, 2013 1:57am
I will try to catch usd cad in this supply area
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  • #1,528
  • Aug 28, 2013 2:00am Aug 28, 2013 2:00am
Stopped out GBPCAD at BE.


Market dynamics are changing across all pairs thanks to war concerns with Syria it seems like.
  • #1,529
  • Aug 28, 2013 2:07am Aug 28, 2013 2:07am
Quoting Axlz
Stopped out GBPCAD at BE. Market dynamics are changing across all pairs thanks to war concerns with Syria it seems like.
Whatever happens due to concerns with war or anything, we shouldn't care about it for our trading, we should just trade what we see on the charts after all. We'll have opportunties with or without war. Hopefully there will no war, but it looks like some countries need to fine-tune their war machinery!

Alfonso
Set and Forget supply and demand trading community
  • #1,530
  • Aug 28, 2013 2:21am Aug 28, 2013 2:21am
Looking to go short on a fresh H4 supply area on AUDCAD at 0.9419. Previous demand at last week low has been taken out, the speedbump demand in purple should not worry us since it's against the trend and in the middle of the curve. We have room to previous D1 demand. There is also a H1 supply speedbump on H1 at 0.9385.

Even thought the limit sell order does not look like set on my MT for analysis, it's set on my VPS with my EA. 99% of my trades will be like that from now on. I work much faster on my desktop, but since I am travelling often, VPS is the solution for my trades.

Alfonso
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Set and Forget supply and demand trading community
  • #1,531
  • Aug 28, 2013 2:31am Aug 28, 2013 2:31am
Quoting panoramia
Looking to go short on a fresh H4 supply area on AUDCAD at 0.9419. Previous demand at last week low has been taken out, the speedbump demand in purple should not worry us since it's against the trend and in the middle of the curve. We have room to previous D1 demand. There is also a H1 supply speedbump on H1 at 0.9385. Even thought the limit sell order does not look like set on my MT for analysis, it's set on my VPS with my EA. 99% of my trades will be like that from now on. I work much faster on my desktop, but since I am travelling often, VPS...
Hi there, i am looking for that too.
When we have nice speedbump on h4, there is always "normal" supply or demand area on lower h1 timeframe.
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  • #1,532
  • Edited 3:12am Aug 28, 2013 2:42am | Edited 3:12am
I've been working on correlations for the last couple of days. I know many pairs are correlated with commodities, indexes, gold, copper, etc. But I wanted to work on correlations mainly amongst currency pairs for now.

I've taken information from several sites and used an indicator that overlaps 2 pairs on top of each other to verify that correlation exists and to which degree.

The table below is a correlation table for 120 days on the DAILY chart.

Remember this, it is key:

  1. Correlations are not exact and they don't work always
  2. They be used to have a general idea of how pairs move in relationship to others
  3. Correlations are great to know when and where you have to trail your existing entries
  4. Trade what you see on your charts, not what correlation tells you
  5. If there is a "contradiction" according to correlation, always pay attention to the clearer setup, forget about the ones that are not clear enough

COLOR CODES:

  1. GREEN. stands for very strong positively correlation > 0.80. For example EURAUD / EURUSD has a green 0.86 correlation. If EURUSD rallies then we can expect EURAUD to rally as well
  2. RED: stands for very strong negatively correlation < -0.80. For instance GBPCAD / CADCHF has a red -0.86 correlation. If GBPCAD drops then CADCHF will most likely rally
  3. BLACK: stands for strong negatively/positively correlation, < 0.70 or -0.70. I didn't want to use 2 colors for this so both - and + use black. It's also a strong correlation but not as strong as green/red colors

I hope this table helps you to have a general idea of correlations amongst currency pairs. It can help you decide which pairs you want to trade and which ones you want to remove from your list since they are highly correlated with others that you have.

  1. Me for example, I've decided to trade GBPCAD instead of CADCHF, I also removed EURCAD since it's not too volatile and highly correlated with EURJPY, EURAUD, etc.
  2. If you are at D1 Demand area on EURUSD and at D1 supply area on USDCHF, then longs on EURUSD will have higher probabilities

Alfonso

The table below is a correlation table for 120 days on the DAILY chart

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Set and Forget supply and demand trading community
  • #1,533
  • Aug 28, 2013 2:47am Aug 28, 2013 2:47am
Looking at the corelation table there is a problem about aud usd and aud cad. They are corelated.
Aud usd is in the fresh (but is it original? ) daily demand, so we should be looking for long.
On other side, aud cad looks like we could try to take short (after correction).

Any sugestion?
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  • #1,534
  • Aug 28, 2013 3:08am Aug 28, 2013 3:08am
Quoting pres78
{quote} To be honest I am not 100% sure what the outcome of this portion of my trading studies will me to but I know this seems like a very logical next step and at least a perfect extention to what I was already doing. Will this become a way to tweak entries and better trail them for max profits or will this become the way I trade with no further consideration to volume or VSA... We will see I guess. How are things going with you?
well like you i find this strategy logical and very obvious when you look whats happened historically at these levels, also what appeals is "set and forget" vs on the ball in VSA however i also thik combining the two could offer better R:R and timing.Anyway lets see......
  • #1,535
  • Aug 28, 2013 3:09am Aug 28, 2013 3:09am
Quoting sebkor6
Looking at the corelation table there is a problem about aud usd and aud cad. They are corelated. Aud usd is in the fresh (but is it original? ) daily demand, so we should be looking for long. On other side, aud cad looks like we could try to take short (after correction). Any sugestion? {image} {image}
Well, AUDUSD is also at Monthly speedbump demand, which is being respected but also being penetrated further and further down. I always will trade the clearer setup, for me the clearer one is the AUDCAD. Correlations are great to know when and where you have to trail your existing entries.

In this case, unless things change, I will have my AUDCAD short there because it's a clear setup, whereas the AUDUSD has no clear setup.
Alfonso
Set and Forget supply and demand trading community
  • #1,536
  • Aug 28, 2013 3:32am Aug 28, 2013 3:32am
USDJPY and EURJPY time for longs?
  • #1,537
  • Aug 28, 2013 3:46am Aug 28, 2013 3:46am
Quoting Axlz
USDJPY and EURJPY time for longs?
Axlz, the fact that the yen pairs have dropped a lot yesterday does not mean that we should be looking for longs. There are no reasons to go long, EURJPY is still bearish and not a higher timeframe demand.

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You want to buy EURJPY in such a mess? So much tading in the zone on H4 and so many wicks! Time at level = 0, those are the rules. D1 demand has not been reached. I am looking to go short on EURJPY at the first fresh speedbump that respects the trendline, higher in the curve. I am not buying until we reach a good demand area and at the D1 demand in this case.

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Hope my analysis makes sense to you.
Alfonso
Set and Forget supply and demand trading community
  • #1,538
  • Aug 28, 2013 3:56am Aug 28, 2013 3:56am
Hi,

gpb usd. We are close to the daily demand fresh and oryginal area.
Question: can we set fire and forget trade drilling to the h4 demand?

I thin'k not, because bounced from weekly supply. Weekly as we know is stronger than daily.
I will in that case wait only for confirmation trade. What do you think?
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  • #1,539
  • Aug 28, 2013 4:09am Aug 28, 2013 4:09am
nice thread you have here...the key to economics is supply and demand...i enjoy trading supply and demand , it only take time to understand
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MY OPINION NOT FINANCIAL ADVISE
  • #1,540
  • Aug 28, 2013 4:15am Aug 28, 2013 4:15am
Quoting sebkor6
Hi, gpb usd. We are close to the daily demand fresh and oryginal area. Question: can we set fire and forget trade drilling to the h4 demand? I thin'k not, because bounced from weekly supply. Weekly as we know is stronger than daily. I will in that case wait only for confirmation trade. What do you think? {image} {image}
Yes, I agree with your Sebastian. The type of trade is "set & forget", not "fire" Look at where we're in the curve on the pound on the spreadsheet.
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We're too high in the WK supply curve, bouncing of WK supply. We're in the middle of the curve in the Monthly chart.
The D1 ascending trendline joining last 2 obvious valleys has been solidly broken as well. That D1 demand is valid but against the new market dynamics. If anything, a confirmation trade to go long. We could bounce off D1 demand, rally towards the purple (non-confirmed D1 speedbump supply since it didn't absorb previous demand) and then continue its way down.

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Alfonso
Set and Forget supply and demand trading community
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