Supply and demand in a nutshell by Alfonso Moreno

hey guys,
enjoying reading and learning from this tread. Here is my EUR/GBP trade...
took an entry on h4 timeframe. Desc. trendline been broken, price has made higher high...so far level I have picked worked great.

Great entry on EUR/GBP my friend. I am exclusively trading the D1 TF so I missed that one. There was a D1 CP right where you entered but it did not consolidate away so I couldn't take it on the D1. Congratulations!

Alfonso

Hello fellow trader,
If you couldn't attend today's supply and demand webinar, you can watch the recording.

We went through some of pairs trying to look for bigger timeframes longer term analysis. I believe many important subjects were covered. I made an error and I couldn't record the full webinar, sorry for that.

1. What to and not to do when a bigger timeframe is in control, for instance, Monthly demand is in control, shorts are not allowed on set and forget, they will be lower odds. We'll need to wait for confirmation for shorts or wait for a bigger retracement on bigger timeframes
2. Realignment rules. If the bigger timeframe of our sequence is in consolidation, we can't set and forget our trades against the intermediate timeframe direction. That is, if Monthly is consolidating, Weekly and Daily are down, we are allowed to short as long as opposing Monthly demand zone in the Monthly range takes control, we'd have to wait for confirmation to go long and shorts, trendline breaks, new demand zones, etc
3. How CP (Continuation Patterns) are low probability when price has been running in a direction for sometime. CP patterns are high odds when they happen at the beginning of an imbalance or after the breakout of an important zone
4. A new level needs to take out an opposing zone in the timeframe we've detected, however, if that doesn't happen but the level broke the most recent trendline on that timeframe, the level will be confirmed as valid. For instance, Daily is down and dynamics change, brand new imbalance with a bullish engulf pattern causes the break of the descending daily Trendline. That's a new level of demand. We need to have support from bigger timeframes, new levels breaking trendlines in no man's land are not valid
5. Location and what a level accomplished is crucial. A level that is nested within bigger timeframe's imbalances has better odds than one that did not. A level that caused the break of an important zone has higher odds than one that did not

We analyzed these pairs:

1. Dollar Index. Bullish but hit fresh Monthly supply, not good for longs because it's too high in the Monthly curve and over-extended in lower-timeframes. Dollar Index is highly correlated with the EURO and majors remember
2. NZD/USD. Low in the curve now, Daily lost momentum, some longs could happen
3. AUD/NZD. A D1 short trade was described step by step
4. EUR/USD. Similar to the US Index but opposite, we also took a very quick look at USD/CHF which is a mirror of EUR/USD and very close to US Index. One of the members took a Daily long by tweaking the rules, as explained in the webinar, it was a correct long based on the location of the D1 zone
5. EUR/JPY. It did not close underneath the WK demand zone that caused the break of the trendline. I had a loss there, not all are winners, in fact many are losses since that's part of our work as trader, this is just one of them
6. EUR/ZAR. Similar scenario to EUR/JPY, bouncing off Monthly demand zone. Confirmation type of trade on the Weekly

Have a great weekend! The sun is shining, summer is not gone yet in my area
Enjoy!
Alfonso

Thanks a million, much appreciated.

I had attended and lost the internet connection(due to electricity outage).

Will much attentively.

Kind Regards

Abie

MN: Up trend broken, recent down trend established. Fresh,not original, level is touched and respected. No ZD created. Tell me: wait / reaction to previous ZD, the trend is DOWN.

W1: Down trend broken. New ZD formed, only due to TL broke . No new up trend, no HH formed. Piercing pattern formed, not confirmed. Tell me: Good up reaction to MN ZD.

D1: Down trend broken + 2 HH created, then new up trend created. Last ZD, complish 2 to 1 rule (expand leg), Fresh but not original. Tell me: Potential counter trend (HTF) trade at last D1 ZD, not set-and-forget (may be view at H4 reactions), good RR 1:3.

Sorry Im just learning. What do you think about analysis and potential trade?

Many thanks

I am also looking at a LONG D1 TF entry from 7797 if price retraces back to that nested WK/D1 level.

I am not interested in the higher D1 DZ around 7873 as that zone has not been validated by price action taking out a previous opposing SZ from 9th September.

Hi Fex,

My thoughts are:

1. I agree with you that MN and WK bias currently appears SHORT.
2. However, I see the D1 situation as follows:
   1. Price action since mid-Sept has taken out previous opposing DZ's from 2013-07-09, which validates the SZ shown in the attached D1 chart
   2. So I am intending on trading short from a nested D1/WK SZ from 12934 with a TGT to exit all positions at 12330 when price hits a WK DZ that I think is currently in control.

Interesting differences aren't they.

So where are you intending to trade from, and in what direction?

Hi GregT, thanks you.

I'm same sell PO at D1 SZ, with same exit, Sl more tight . But waiting watching PA H4 1.2650 (2nd DZ created by D1 trend break) go long to SZ.

Regards

I was thinking the same long operation , but, why that zone was not validated? Thanks GregT

Hi alfonso,

thank you for your significant and valuable contribution. I am so happy I found your thread.
Could you/someone please tell me where i can download 50% basing candle indicator

Regards

Its included in the great RectangleReader indicator.

thanks fex

is it a similar technique that Sam Seiden teach in OTA?

It's supply and demand yes, same thing. But rules are different, the main difference is that we have rules here, one by one. In fact, post #1 inclused rules used that if applied as explained will give you lots of odds of success in your trading, but it's not an easy task, you know what I mean!

Cheers,
Alfonso

hi im begginer on this way
this analyze is true?
eurjpy daily

Well, you are referring to pin bars and now drawing supply and demand zones as per the rules, the trendlines you are drawing are not drawn as per the rules... So I can't tell you the analysis correct because the zones are not correct and in order to make a decision and/or analysis we need multiple timeframe analysis.

Thanks,
Alfonso

Hi,

8.NIKKEI index. Use it with the Yen pairs. If Nikkei index is in an uptrend, we will have a weak Yen, don't short on yen cross pairs like EURJPY, GBPJPY, etc
9.S&P 500 index. Use it to assess US Dollar strength as well, similar to Nikkei. If US index is in an uptrend, we will have a weak USD, don't buy US dollars, buy euros

i don't understand why stock and currency are negatively co-releated. any specfic reason? .

Regards

now eurjpy
h4

Attached Image (click to enlarge)

h4

Attached Image (click to enlarge)

Hi Randolf,

H1 charts are not allowed in this thread, minimum H4, please remove previous one. Also you are not drawing the zones as per the rules, you are leaving old sone on the charts and that's very very confusing. Old zones are gone, they are not relevant to current price.

Could you please remove your previous post? It will confuse others and H1 is not allowed, this is not an intraday thread but a swing/position one.
Thanks,
Alfonso

which zones is old please show to me
thnaks randolf