Price Action made simple with Supply and Demand levels

Stephen Thom-

What happens when you try to upload?
Have you ever been able to upload charts?

Try this:

1. Click on upload from computer
2. Find your file and click ok
3. IMPORTANT WAIT FOR FILE TO COMPLETE UPLOAD
4. Then insert file. (will look like this [attach]179xxx[[attach]
5. That is ok it will upload correctly after you post your reply
6. DO NOT DELETE THE UPLOADED FILE AT THE BOTTO OF POST

I would like to share my AUD/USD chart with you.

I have gone up to a 1 hr chart to make my zones so that I can show you.

I have a few areas drawn in for you.

Hi Gilamonster,

Question about your UJ chart there. The demandzone on the H4 - just looking to clarify a couple things here...

1) Beneath the zone, there is a pinbar followed by a bull candle - this is a zone in itself?
2) Your highlighted zone - that's a reaction to this (pinbar zone) , it dropped into it, rejected it - then rallied out?

Just trying to get this clear in my mind and hope this is clear?

Stephen Thom-

I do have one more comment about your area.

The zone is good but, I am uncomfortable with how far price had moved from the zone before being tested by price.

I did a pre market routine on AUD and the USD and I like hat I see on their futures daily charts becuase they are negatively correlated right now.

Like I said the only thing is how far price had moved.

Remember that was still a good zone. I would monitor price action if in this trade.

Be patient and disciplined and accept what happens.

Gilamonster, thanks i will try that. Yes i have my stop at 0.9635 tp 0.9590, so 2:1 rr, not the best but acceptable on a 5 min setup. If it does get as low as 0.9576 i will not be buying it, agree it is not fresh. Interesting area you point out down at 0.9487, i had not seen that, Thanks

Yes i agree with everything you say. I just felt that given the strength of the initial move there would be some kind of bounce. Having said that, it has already been to +13 on my platform and on that basis sl is now be. It either works or it doesn't from this point.

S Ferrer-

Thank you for being assertive, but if you do go back to Aug. of this year you will see where this zone had formed.

I knew this because I had taken that trade when it tested that zone.

So that Hammer is Not Fresh anymore.

With the new entry in the zone I have marked above that you will notice that it is a DBR.

I am very cautious about DBR or RBD becasue they are usually a reversal from a zone.
But this one is fresh. and I will enter in that zone.

I have included y alert to go off and will monitor price action as I do in every trade

If it takes me out that is fine because I have followed my plan. Here is my chart of USD/JPY

Stephen Thom-

Yes thank you too. I see that you may have your own rules and plan for trading already.

Good for you. It is showing that you do have great discipline and patients.

I like this style of trading, it makes a lot of sense that all we're seeing in the charts is price moving around consuming orders.

Anyhow, here's one for the group that I'd like to share - AUDUSD on the H1.



Price has rallied upto our area - based - then been forced back down.

1) Area look fresh
2) Price didn't hang around there for much time at all.

I will watch this one...

Any thoughts from the guys on here?

Thank you. 'Look Left' is the lesson, I see the zone you refer to earlier in the year. Cheers.

Nice catch! Looks good!
FYI, I'm looking at another level on AUD/USD https://twitter.com/Fx_Price_Action/...600577/photo/1

Gilamonster-

Thank you very much! This is a great thread.

I don't have my own rules of trading "supply and demand zones" yet. I am currently trading traditional support/resistance with price actions such as pin bars, engulfing bars. When I do that, I always watch out for traffic areas in front of my positions. I don't like to enter a position right into a messy area. Let's use your proposed USDJPY long trade as an example. you plan to enter @96.95 and profit target @ 97.55. That means your long position has to go through the side-way move traffic area created in the past day or so. I understand there is no obvious supply level in this area. But does this traffic area concern you at all?

I have three more questions,

1. we don't take levels created by a long side-way move (base) and a strong upward move (rise) as a demand zone and a long side-way move base and a strong drop as a supply zone. At least we don't think they are good demand/supply levels because of the elongated side-way move (too many bars in the base). But if in the future, price reacts to those levels and creates nice-looking text book supply/demand zones (quick drops and rises) in the same directions of the original not-so-good zones. Do we take them as fresh supply/demand zones or take them just as tests of not-so-good original supply/demand zones, therefore not to use them for our trading purpose?
2. When we try to identify solid supply/demand zones, do we need to consider at which time (Asian/ European/ US trading times or in between) those zones are created? Does the time when they are created has any impact on their qualities? I like to think big players would like to do their tradings during more liquid European/US trading time (of course depends on which pairs), and good supply/demand zones can only be created by those big players. Therefore supply/demand zones created during liquid hours are more reliable?
3. Some of the supply/demand zones are created by news release, especially at 8:30am eastern US time. So those levels are created due to impulsive knee-jerk reactions to news developments other than actual supply/demand imbalance created by big players' accumulations or distributions. I did a quick and brief back test on levels created at 8:30 eastern time, they seem to be not so reliable. I love you hear your opinions on that.

By the way, I took the same GBPUSD short last night. I actually set it up yesterday afternoon (US eastern time). Then I saw your post on the GBPUSD short setup. It was really a confidence booster for me to see the zone I identified was very similar to yours. It was nice to wake up to see the trade went as we envisioned.
Thank you for your great teaching.

Wouldn't that area up there be watched too?

S Ferrer-

Beware of zone. But follow your rules. I won't take this trade.

Don't pay attention to my entry order.

Yes, i like that level. When i tried my small short earlier (from 0.9620, now stopped out for b/e) i had a feeling it would test that upper level. I will be watching for it. Thanks.

Gilamonster, Stephen - I'll watch this one, see how it plays out.

@JF_Derzi - I'm no expert on this, but I am not sure if the upper level is fresh. Look at the D1, looks like it's been touched?

Hello everyone,

Nice thread Thomaas.
I noticed a few people looking at the aussie...I have a trade planned along the lines of many here, just thought i'd share my charts

Quoting sclz
3. Some of the supply/demand zones are created by news release, especially at 8:30am eastern US time. So those levels are created due to impulsive knee-jerk reactions to news developments other than actual supply/demand imbalance created by big players' accumulations or distributions. I did a quick and brief back test on levels created at 8:30 eastern time, they seem to be not so reliable. I love you hear your opinions on that.

It is true that some of these supply/demand levels are created by news releases in that when the actual news is released some of these big players need/want to buy or sell a particular instrument (could be a stock, commodity, currency etc) based on that news, so for fundamental reasons. However, because of a lack of liquidity not all of these buy/sell orders can be actioned at that time. So when or if that price is revisited a lot (on the first test) of those orders are still in place and need to be actioned. That is why the trade setup works so consistantly. In other words i think they are actual supply/demand imbalances, or at least they become so at that time. This is why it is so important to look for fresh levels because the more a supply/demand level is revisited it is less likely to work because there are increasingly less orders to be filled. This is my understanding of it anyway. A mix of fundamentals and technicals, if you like. I would be interested to know others opinions on this. Great thread.

Hi guys, thanks Thomas for starting the thread. Your first post was great; you explained how to draw the levels with that link, which I thought was great. Very helpful, a lot of people including me for a while had problems with drawing them and defining them.

I have been following a group of traders from Dark stars order flow website, they have told me that limit orders which are orders set at a supply or demand levels, don’t move price.

They say that market orders move price and limit orders slow price movement due to the fact that limit orders stacked up provide liquidity for market orders.

Market orders (immediacy of order to be filled at whatever price) Limit orders, executed when current price reaches the limit price for execution. That is the way I understand how orders are executed and how price moves.

My question is how do limit orders move price if the above is true?

Limit orders will only be consumed by market orders and price being moved to fill those market orders, which limit orders fill.

Can someone shed light on this for me, I am hearing conflicting answers of the market structure as to how price moves, I’m not saying that they are wrong, but they way they have explained things to me, I can’t understand how limit orders would move price, I can understand market orders coming in at those levels to move price but not limit orders.

I have heard that same thing, about the stocks and big traders wanting to buy or sell something else and having to convert and not wanting to pay high transaction cost so they set their orders at a certain level and wait for price to come back and fill all of their orders. Its not just stocks, I believe its just trade in general. Not sure if that's how it works but yeah. Can anyone else confirm?


But yeah bro, I think you have the right idea.