Supply and demand in a nutshell by Alfonso Moreno
- #2,524
- Sep 16, 2013 1:07am Sep 16, 2013 1:07am
{quote} By the way Ivan, take a look at USDJPY D1 chart, D1 demand respecting the D1 ascending trendline. The H4 supply looks really nice, I'm concerned about that D1 demand zone, D1 demand it has not been hit yet (maybe on some brokers yes, but I doubt it). I don't see your D1 zones on your USDJPY H4 chart, so I guess you did not draw that D1 demand and ascending TL. I will not fight against such a D1 uptrend with compressed supply at the top. That H4 short could be a nice short if D1 demand is not hit, if hit, the H4 short will be automatically...
Really appreciate your continual input as you point out many things which sometimes are not clear to me.
- #2,525
- Sep 16, 2013 1:12am Sep 16, 2013 1:12am
- | Commercial User | Joined Aug 2011 | 3,559 Posts
{quote} Hi Alfonso, you hit the nail on its head, I was exactly concerned about the D1 demand! And yes I would definitely pull my H4 short if that demand is hit before I'm triggered short. I deliberated for some time, measured the pros and cons and decided it was worth a try as the RR is decent enough (slightly more than 3:1). Oh and I usually only include the main zones of interest when I'm posting so its clearer what I'm referring to, but I do have the HTF zones drawn on my actual charts.
If I look at the H4 chart exactly as you posted it, I would be inclined to short that UJ H4 supply zone no matter what, but by having the D1 demand trendlines, that would make me thing about stating to go short!
So now we have like 2 possibilities on the UJ, another IF THEN scenario... let's see what IF scenario weighs more!
Alfonso
Set and Forget supply and demand trading community
- #2,530
- Sep 16, 2013 1:38am Sep 16, 2013 1:38am
{quote} We already bounced from Daily demand and have been given confirmation to go long. Monthly supply is in control, so it is logical to avoid any set and forgets at this point. This however, is not set and forget. The direction has already been confirmed. That's just my opinion anyway.
I was also looking to long this pair, and we did have H4 confirmation as of Fri. However the morning gap and spike down has taken out the most recent H4 demand, in my opinion the market dynamics have changed and longs are no longer valid. Just my personal opinion, might be wrong!
{quote} Hi Samir, I was also looking to long this pair, and we did have H4 confirmation as of Fri. However the morning gap and spike down has taken out the most recent H4 demand, in my opinion the market dynamics have changed and longs are no longer valid. Just my personal opinion, might be wrong! {image}
You pose a good point!
However, it happened right at the Asian market open, and with a Japanese bank holiday, nonetheless. It would seem that perhaps, the market was extremely illiquid during that time, and that may be the reason for that level being penetrated?
I am just speculating. I could easily be wrong.
- #2,534
- Sep 16, 2013 2:11am Sep 16, 2013 2:11am
{quote} Hi Ivan, GBPAUD has touched weekly and monthly supply, shouldn't we expect some daily levels to be taken out, similar to the H4 levels when a D1 supply is touched? {image}
I agree with you that GBPAUD has touched weekly and monthly supply, and we should expect daily levels to be taken out. But expect doesn't mean it'll definitely happen. In this case the daily level held, and price broke the down trend line as well as started taking out supply levels on the H4. So my idea was to try and catch a mini H4 uptrend until the D1 supply.
But now that the most recent H4 demand has been broken, this is no longer valid. Currently I'm secretly hoping the D1 demand will break as there is a lot of space below which is nice for shorting. And I know we don't use chart patterns but I can't help noticing that there will be a daily head and shoulders if we actually break down.
- #2,538
- Sep 16, 2013 2:27am Sep 16, 2013 2:27am
- | Commercial User | Joined Aug 2011 | 3,559 Posts
{quote} Hi Alfonso, you hit the nail on its head, I was exactly concerned about the D1 demand! And yes I would definitely pull my H4 short if that demand is hit before I'm triggered short. I deliberated for some time, measured the pros and cons and decided it was worth a try as the RR is decent enough (slightly more than 3:1). Oh and I usually only include the main zones of interest when I'm posting so its clearer what I'm referring to, but I do have the HTF zones drawn on my actual charts.
Take a look at the AUDJPY example you mentioned. D1 used-up supply level. What do we do on D1 supply used-up levels? Post #1 shows it:
Rule:
1. Wait for your entry timeframe's demand to be broken
D1 chart:
In this D1 supply used-up scenario, we can't sell on a "simple confirmation", post #1 shows it. We need a solid break of a TL of previous entry timeframe's demand removed.
Take a look at the H4 chart:
The H4 supply in unfilled red rect is not valid, it didn't remove previous demand. We have level on top of level down below, we're not allowed to sell, we need to remove demand. Are we going to sell on H4 with a D1 used-up supply and thos fresh original and fresh demand areas? I AM NOT
I believe the same could have happened to the other pairs, but I am not trading CHFJPY and others. But take a look at them.
Hope that it makes sense to you Ivan and anybody reading me.
Alfonso
Set and Forget supply and demand trading community
- #2,539
- Sep 16, 2013 2:35am Sep 16, 2013 2:35am
- | Commercial User | Joined Aug 2011 | 3,559 Posts
{quote} Hi Alfonso, I have a steeper trendline in UJ which is not dawn on a CP, would you say this one is not valid? {image}
That D1 area is too much trading in the zone, wicky, not an OBVIOUS valley, it's a meadow with lots of spiky bushes
You need 2 OBVIOUS valleys or peaks to connect a trendline.
Alfonso
Set and Forget supply and demand trading community
- #2,540
- Sep 16, 2013 3:03am Sep 16, 2013 3:03am
{quote} Ivan, as far as the Yen shorts supply levels that you said that were taken out, I beleive they were not valid entries. Why? Take a look at the AUDJPY example you mentioned. D1 used-up supply level. What do we do on D1 supply used-up levels? Post #1 shows it: Rule: 1. Wait for your entry timeframe's demand to be broken D1 chart: {image} In this D1 supply used-up scenario, we can't sell on a "simple confirmation", post #1 shows it. We need a solid break of a TL of previous entry timeframe's demand removed. Take a look at the H4 chart: The...
And that reminded me of another question which I forgot to ask you. Regarding your Fri's USDCHF trade, why didn't you consider the level I marked below as supply? In fact I almost shorted that level and it might have been a loss and one which I don't understand. Have a feeling you could shed some light on this.
