Supply and demand in a nutshell by Alfonso Moreno | Page 105 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #2,081
  • Sep 8, 2013 9:35am Sep 8, 2013 9:35am
Quoting panoramia
{quote} A quick thing I saw on your chart Samir! That ascending trendline USDJPY D1 chart is not valid, you don't have 2 valleys to join the trendline. Speedbumps can't be part of a Trendline. The trendline is no longer valid once a higher timeframe has been touched though, but it's not well drawn from the outset. You can have it like that so that you see that the ascension has stopped right at the D1 supply but it's not a valid trendline. The valid trendline is painted in orange in the attached chart. Hope that it makes sense, I am just following...
As Alfonso said, there is a nice H4 demand zone within the fresh D1 Demand.

It is fresh and original! Excellent for set and forget.

I have put two horizontal lines to represent the proximal and distal lines of the D1 demand.

Attached Image (click to enlarge)
Click to Enlarge Name: UJ FO.png Size: 46 KB
  • #2,082
  • Sep 8, 2013 9:41am Sep 8, 2013 9:41am
Quoting Axlz
{quote} As Alfonso said, there is a nice H4 demand zone within the fresh D1 Demand. It is fresh and original! Excellent for set and forget. I have put two horizontal lines to represent the proximal and distal lines of the D1 demand. {image}
My question is... why don't you use the rectangle extender indicator to AUTOMATICALLY draw those horizontal lines for you? I don't understand!

There are 2 videos that explain how to do that, having horizontal lines scaterred throughout your charts is not that clean. You will not have the curve % calculated either because you are not manually drawing your levels. But if that's the way you like to do it, it's up to you You are not taking advantage of such a powerful feature that we have built into the rectangle reader indicator.

Alfonso
Set and Forget supply and demand trading community
  • #2,083
  • Sep 8, 2013 10:06am Sep 8, 2013 10:06am
Quoting panoramia
{quote} My question is... why don't you use the rectangle extender indicator to AUTOMATICALLY draw those horizontal lines for you? I don't understand! There are 2 videos that explain how to do that, having horizontal lines scaterred throughout your charts is not that clean. You will not have the curve % calculated either because you are not manually drawing your levels. But if that's the way you like to do it, it's up to you You are not taking advantage of such a powerful feature that we have built into the rectangle reader indicator. Alfonso...
I don't think the lines show up unless the market is moving and producing ticks. I just clicked refresh, and it showed up, but I think I have to keep doing that when the markets are closed.

I will remember to make sure the lines are showing up in the future.
  • #2,084
  • Sep 8, 2013 11:42am Sep 8, 2013 11:42am
Hi Alfonso,

regarding trendlines...on my EURNZD H4 chart, which of the two trendlines (orange) would you consider as valid and why?
Attached Image (click to enlarge)
Click to Enlarge Name: eurnzd trendlines.png Size: 32 KB
  • #2,085
  • Sep 8, 2013 11:51am Sep 8, 2013 11:51am
Quoting Olarion1975
Hi Alfonso, regarding trendlines...on my EURNZD H4 chart, which of the two trendlines (orange) would you consider as valid and why? {image}
Hi there!
Both trendlines are valid, but I always use the latest 2 obvious peaks and valleys, so that I can make sure I am still trading with the current trend. If there was a 3rd obvious peak (inverted U) that matched the previous 2 ones, I would extend the TL to it, but it's not the case, so the lowest (most inclined one) would be the one I would be looking at.

I believe that EURNZD has already touched previous D1 demand area, so D1 demand could take control. Once the opposing D1 demand area has been hit, the trendlines are no longer valid to continue in that downtrend in this case. Why? Because the higher timeframe areas are the areas where price is most likely to react and turn, so lower timeframe zones can more easily be absorbed if that happens. We've had some opportunities on the way down on H4 on EURNZD, but now it's just too low to keep on selling once the D1 demand has been reached.

That's the way I look at the higher timeframes always!
Alfonso
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 171 KB
Set and Forget supply and demand trading community
  • #2,086
  • Sep 8, 2013 12:01pm Sep 8, 2013 12:01pm
Quoting panoramia
{quote} Hi there! Both trendlines are valid, but I always use the latest 2 obvious peaks and valleys, so that I can make sure I am still trading with the current trend. If there was a 3rd obvious peak (inverted U) that matched the previous 2 ones, I would extend the TL to it, but it's not the case, so the lowest (most inclined one) would be the one I would be looking at. I believe that EURNZD has already touched previous D1 demand area, so D1 demand could take control. Once the opposing D1 demand area has been hit, the trendlines are no longer valid...
Ok, thanks for your view and perfect explanation. Makes sense for me!

Cheers,
Oliver
  • #2,087
  • Sep 8, 2013 12:32pm Sep 8, 2013 12:32pm
Quoting Olarion1975
{quote} Ok, thanks for your view and perfect explanation. Makes sense for me! Cheers, Oliver
Just one additional question: if we were only looking at weekly as our curve and H4 for our entry, then we could sell again if the TL is respected?
In this case we would not know that we touched the D1 demand level, right?
  • #2,088
  • Sep 8, 2013 12:40pm Sep 8, 2013 12:40pm
Quoting Olarion1975
{quote} Just one additional question: if we were only looking at weekly as our curve and H4 for our entry, then we could sell again if the TL is respected? In this case we would not know that we touched the D1 demand level, right?
Happy to answer that Oliver. Yes, we'd be allowed by just looking at the WK/H4 swing combo. BUT, you don't need to look at the D1 to realize where we are right now. We're far from the Weekly demand area on EURNZD. We're right at 65% on the WK curve, at an important resistance that became support on the retest.

Price has been there at that support area a few times already, area is under attack (painted in --- purple color). We're very low and close to that support/resistance area. I'm not allowed to sell in such an area, price could go anywhere. I can't and won't buy into higher timeframe support.

If that support is solidly broken it will be a nice short swing trade to hold lower to the WK demand area. See the attached Weekly chart.
That's my personal opinion, like always. Following my rules. We're just too low and close to support (different to demand, there is no demand imbalance on the WK chart there).

Alfonso
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 109 KB
Set and Forget supply and demand trading community
  • #2,089
  • Sep 8, 2013 12:47pm Sep 8, 2013 12:47pm
Quoting panoramia
{quote} Happy to answer that Oliver. Yes, we'd be allowed by just looking at the WK/H4 swing combo. BUT, you don't need to look at the D1 to realize where we are right now. We're far from the Weekly demand area on EURNZD. We're right at 65% on the WK curve, at an important resistance that became support on the retest. Price has been there at that support area a few times already, area is under attack (painted in --- purple color). We're very low and close to that support/resistance area. I'm not allowed to sell in such an area, price could go anywhere....
Brilliant explanation. Thanks very much for your fast reply. It is always nice to learn more about your thinking...and I like it very much.
Have a nice evening.

EDIT: Just gave you my vouch for your excellent technical analysis, your great effort you put into this thread and the webinars. Awesome stuff that could not presented any better.

Oliver
  • #2,090
  • Sep 8, 2013 12:58pm Sep 8, 2013 12:58pm
Quoting Olarion1975
{quote} Brilliant explanation. Thanks very much for your fast reply. It is always nice to learn more about your thinking...and I like it very much. Have a nice evening. EDIT: Just gave you my vouch for your excellent technical analysis, your great effort you put into this thread and the webinars. Awesome stuff that could not presented any better. Oliver
Thanks for your vouch and your compliments Oliver, I really appreciate that Doing my best to help others understand supply and demand and being mechanical ini the way of looking at the markets while looking for trade opportunities. In the case of the EURNZD, I didn't do anything extraordinary. If we just look at the WK chart, we can see that we have bounced off the WK supply and now we are are WK support (not demand, there is no demand imbalance there).

You just need to ask yourself: am I close to support/demand? If yes is the answer, you are not allowed to sell. I believe trading should be that simple. Once we gain the experience and confidence, if we look at the charts for more than 20 seconds and we don't know if we have a setup or which direction to go then "Houston, we have a problem" Skip that pair and switch to one that has a clearer trend, away from the extremes and room to the opposing SD area.

Thanks again for your support Oliver!
Alfonso
Set and Forget supply and demand trading community
  • #2,091
  • Edited 6:21pm Sep 8, 2013 2:20pm | Edited 6:21pm
EURJPY:

Daily:


Looking at some other charts, as well as Alfonso's analysis of EJ on his last webinar, shows that we have different candles. On MY chart, there is a valid, fresh, original Daily supply, that shows to be a reaction on Alfonso's chart. But on my chart, the difference between it being in the zone to be unoriginal and original is a VERY SMALL MARGIN, so either of us could easily be wrong, due to chart differences .

However, As Alfonso has said, you must trade what you see, so I will dub it as original, and fresh on my chart.

Attached Image (click to enlarge)
Click to Enlarge Name: EJ Daily.png Size: 52 KB


H4:

Attached Image (click to enlarge)
Click to Enlarge Name: EJ 4h.png Size: 55 KB


Now in this Daily demand zone, there is a fresh, but unoriginal H4 demand zone. As per the rules, WE CAN ONLY GO COUNTER TREND ON FRESH AND ORIGINAL LEVELS (NO SPEEDBUMPS EITHER)! No trade for me, unless confirmation is given!
  • #2,092
  • Sep 8, 2013 5:43pm Sep 8, 2013 5:43pm
Quoting Axlz
EURJPY: Daily: Looking at some other charts, as well as Alfonso's analysis of EJ on his last webinar, shows that we have different candles. On MY chart, there is a valid, fresh, original Daily supply, that shows to be a reaction on Alfonso's chart. But on my chart, the difference between it being in the zone to be unoriginal and original is a VERY SMALL MARGIN, so either of us could easily be wrong, due to chart differences . However, As Alfonso has said, you must trade what you see, so I will dub it as original, and fresh on my chart....
Axlz,

I think that 4hr demand zone within the Daily is both fresh and original as the two upbars before the base is formed make the price wall which keeps you from looking any further left and as such the demand zone is original as it was not formed as part of any other 4hr demand zone.
Today's zone = Tomorrow's opportunity!
  • #2,093
  • Sep 8, 2013 5:53pm Sep 8, 2013 5:53pm
Quoting pres78
{quote} Axlz, I think that 4hr demand zone within the Daily is both fresh and original as the two upbars before the base is formed make the price wall which keeps you from looking any further left and as such the demand zone is original as it was not formed as part of any other 4hr demand zone.
According to the 4H chart I posted, it is a reaction to a zone, which is a reaction to another zone.

This makes it fresh, but it is not original, as it is a reaction.

If you look closely at the bottom, you'll see how these zones stack on top of one another, meaning they are reactions to previous zones, and not original.
  • #2,094
  • Sep 8, 2013 6:02pm Sep 8, 2013 6:02pm
Quoting Axlz
{quote} According to the 4H chart I posted, it is a reaction to a zone, which is a reaction to another zone. This makes it fresh, but it is not original, as it is a reaction. If you look closely at the bottom, you'll see how these zones stack on top of one another, meaning they are reactions to previous zones, and not original.
Yeah my bad looked at the proximal and not the distal. OOPS!
Today's zone = Tomorrow's opportunity!
  • #2,095
  • Sep 8, 2013 6:06pm Sep 8, 2013 6:06pm
Quoting pres78
{quote} Yeah my bad looked at the proximal and not the distal. OOPS!
Don't worry, we are all still newbies trying to learn from each other
  • #2,096
  • Sep 8, 2013 6:25pm Sep 8, 2013 6:25pm
A Fresh and original EJ 4H supply to go short off of, within Daily unfresh supply.

Attached Image (click to enlarge)
Click to Enlarge Name: 4h EJ supply.png Size: 48 KB
  • #2,097
  • Sep 8, 2013 6:31pm Sep 8, 2013 6:31pm
Fresh and original 1H supply within Daily unfresh supply to go short off of (USDJPY).

Attached Image (click to enlarge)
Click to Enlarge Name: UJ 1H supply.png Size: 41 KB
  • #2,098
  • Sep 8, 2013 6:34pm Sep 8, 2013 6:34pm
EURJPY 1H fresh and original supply to go short off of within D1 unfresh supply.

Attached Image (click to enlarge)
Click to Enlarge Name: EJ 1H supply.png Size: 41 KB
  • #2,099
  • Sep 9, 2013 2:08am Sep 9, 2013 2:08am
Axlz, good morning,

I think we can not go short AUDJPY, because the D1 is in an up-trend, so in order to go short at a daily level we need a original and fresh level. Since the level is not fresh, this is not an option. This is how I see it.
Attached Image (click to enlarge)
Click to Enlarge Name: Image1.png Size: 92 KB
  • #2,100
  • Sep 9, 2013 2:10am Sep 9, 2013 2:10am
Was a typo, should be USDJPY
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