Support/Resistance vs Supply/Demand... What is the difference? | Forex Factory

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Support/Resistance vs Supply/Demand... What is the difference?

  • #1
  • First Post: Apr 3, 2013 3:13am Apr 3, 2013 3:13am
I have been thinking they are the same thing with different names.
Nevertheless, someone told me they are different things.
Can anyone tell me any difference between them if any?
And is Supply/Demand something first coined by Sam Seiden?
  • #2
  • Apr 3, 2013 4:06am Apr 3, 2013 4:06am
Any idea?
  • #3
  • Apr 3, 2013 9:32pm Apr 3, 2013 9:32pm
To start with, maybe you can give us your own take if there is any difference.

To me, supply/demand are fluid and vague concepts dependent on context and describes a state of being without qualifying it with specifics.

Whereas, support and resistance refers to specific fixed levels.

My two cents.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #4
  • Apr 3, 2013 10:29pm Apr 3, 2013 10:29pm
Quoting skenobi
To start with, maybe you can give us your own take if there is any difference. To me, supply/demand are fluid and vague concepts dependent on context and describes a state of being without qualifying it with specifics. Whereas, support and resistance refers to specific fixed levels. My two cents.
I have been thinking they are basically the same thing. i.e. levels at which prices react relatively strongly.
  • #5
  • Apr 3, 2013 10:32pm Apr 3, 2013 10:32pm
Is it like I and Me
If there was easy money lying around,no one would be forcing it into your
  • #6
  • Apr 3, 2013 10:54pm Apr 3, 2013 10:54pm
My take:

Supply/Demand: A zone, where we assume there are sell/buy orders stacked.

Support/Resistance: A level, where price tested a few times and failed to breakthrough.


Chart:

Attached Image (click to enlarge)
Click to Enlarge Name: Capture.PNG Size: 35 KB
Knowing is not enough; we must apply. Willing is not enough; we must do.
  • #7
  • Apr 3, 2013 11:22pm Apr 3, 2013 11:22pm
Quoting keroro0o0o
My take: Supply/Demand: A zone, where we assume there are sell/buy orders stacked. Support/Resistance: A level, where price tested a few times and failed to breakthrough. Chart: {image}
From my institutional experience...

Support/Resistance: Levels "where price tested a few times and failed to breakthrough", also known as "where sell/buy orders are stacked"

Supply/Demand: Vague and sometimes unquantifiable economic concepts.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #8
  • Apr 3, 2013 11:34pm Apr 3, 2013 11:34pm
To me, I'd say that S/D is like a breakout, where you see a large, large candle in either direction. S/R are simply levels that are everywhere on all time frames, like when a price "fails" to break a "level" and retreats to another "level," only to "bounce" off of it. I'd say that S/D would take time into account, while S/R just takes price only. If you want a chart with some examples, I can do that.
Play the players, not the cards.
  • #9
  • Apr 3, 2013 11:45pm Apr 3, 2013 11:45pm
I trade supply and demand exclusively, so I'll toss my two cents into the hat here.

Support and resistance is where we see a lot of failed attempts for price to move beyond. Very classic idea that a lot of people recognize. Supply and demand is a much deeper idea, though. We're not looking for a line where price had trouble moving through, we're looking for areas of strong price movement away from a zone of price action. My favorite of these are areas for example are where we saw a very strong rally, a little bit of sideways movement as buyers and sellers came to temporary equilibrium, and then a massive drop once all the buyers were filled and only sellers were left. The result? A zone where we have a good idea that there aren't going to be many buyers and probably quite a few sellers remaining. Simple support and resistance can't offer you that kind of insight.
  • #10
  • Apr 4, 2013 4:57am Apr 4, 2013 4:57am
Quoting keroro0o0o
My take: Supply/Demand: A zone, where we assume there are sell/buy orders stacked. Support/Resistance: A level, where price tested a few times and failed to breakthrough. Chart: {image}
So, the difference between the two concepts can reduce to only a difference in width?
  • #11
  • Apr 4, 2013 4:58am Apr 4, 2013 4:58am
Quoting GnarlyPips
To me, I'd say that S/D is like a breakout, where you see a large, large candle in either direction. S/R are simply levels that are everywhere on all time frames, like when a price "fails" to break a "level" and retreats to another "level," only to "bounce" off of it. I'd say that S/D would take time into account, while S/R just takes price only. If you want a chart with some examples, I can do that.
I understand what you said without a chart... thanks.
  • #12
  • Apr 4, 2013 4:59am Apr 4, 2013 4:59am
Quoting Kanzler
I trade supply and demand exclusively, so I'll toss my two cents into the hat here. Support and resistance is where we see a lot of failed attempts for price to move beyond. Very classic idea that a lot of people recognize. Supply and demand is a much deeper idea, though. We're not looking for a line where price had trouble moving through, we're looking for areas of strong price movement away from a zone of price action. My favorite of these are areas for example are where we saw a very strong rally, a little bit of sideways movement as buyers and...
Thanks Kanzler, would you think GnarlyPips are telling the same idea as you?
  • #13
  • Edited 6:02am Apr 4, 2013 5:05am | Edited 6:02am
Support / resistance = pivot lines, ie floors / ceilings respectively and are drawn on fractals.

Supply / demand = areas of consolidation where contracts are built up until 'they' have enough trapped trade to flip the switch, so once enough sellers are duped to buy from, price goes up.
Politics is the womb in which war develops.
  • #14
  • Apr 4, 2013 11:59am Apr 4, 2013 11:59am
Quoting kk007
Thanks Kanzler, would you think GnarlyPips are telling the same idea as you?
No not really although strong moves are part of it. If you just have a strong move in the middle of a bunch of randomish price action that's not necessarily indicative of a level though.
  • #15
  • May 18, 2014 6:36am May 18, 2014 6:36am
@kk007 did you ever get a satisfactory answer to your question " what's the difference between supply/demand and support/resistance? I didn't read the entire thread so don't know if you did or did not but I would like to offer an answer.

supply/demand are real orders to sell and buy a particular commodity at a specified price. Large orders can sometimes be seen on our charts as consolidations. The consolidations are known to be an area of equilibrium as both buy orders and sell orders are easily matched there.

Support/resistance are simply the result of supply or demand. There is support at a particular price level simply because of the demand for the commodity at that price level. On the other hand there is resistance at a particular price level due to the available supply at that price level.

it is as simple as that. One is caused by the other and never the other way around. Without supply or demand there would never be any resistance or support on your price charts.
  • #16
  • Jun 17, 2014 4:16pm Jun 17, 2014 4:16pm
I think it confuses a lot of people, because we can mistakenly look to the chart for both, but as explained well by pjameslamar, Supply/Demand is market orders, Support/Resistance is a chart pattern. This doesn't mean we can't try to put Supply/Demand on the chart, but Support/Resistance is born from Supply/Demand.
  • #17
  • Jun 18, 2014 5:43am Jun 18, 2014 5:43am
A support/resistance level could be without any desquilibrium. A supply/demand level needs it to be create. It's really different from a trading's perspective,
  • #18
  • Jun 21, 2014 3:05pm Jun 21, 2014 3:05pm
I thought they meant the same thing. The only difference is in the context in which they are described.
  • #19
  • Jul 3, 2014 1:54pm Jul 3, 2014 1:54pm
@ziggy25 until you get your mind wrapped around it it does seem to be a matter of semantics but really it's not. It's like all German shepards are dogs but not all dogs are German sheppards. As a matter of rules once a trader identifies a supply or demand zone we know it is a stack of orders but we do not know how many orders are actually there. So, we only take the very first return to the zone as a trade, sometimes the second. But if that stack of orders is large enough price may visit that zone numerous times. These multiple visits show up on our charts as support and resistance.
  • #20
  • Jul 5, 2014 7:49am Jul 5, 2014 7:49am
Quoting Unabletrader
A support/resistance level could be without any desquilibrium. A supply/demand level needs it to be create. It's really different from a trading's perspective,
Forgive me, but if supply/demand created support/resistance then supply/demand is support/resistance.

How can support/resistance be without disequilibrium ? For example, support becomes resistance after support breaks. This level is now resistance ONLY because sellers outweigh buyers. That's why it broke in the first place. In you check the thread from Ken Lee you will see what he calls a flip level is exactly support become resistance and vice versa.
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