Supply and demand in a nutshell by Alfonso Moreno | Page 262 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #5,221
  • Jan 30, 2015 4:29pm Jan 30, 2015 4:29pm
Dear Alfonso, thank you very much for your reply! If you don't mind I would like to ask one more question. I've just watched your video "Trading Forex supply and demand imbalances with the bigger picture trend" and I'm trying to analyze HTF. When watching the video everything is clear but in real life everything becomes much more complicated for me. Am I right with two nearest SD zones on this chart? I'm not sure if zones №2 and 3 are valid. They did not remove any SD zones, they did not break any TL. Should we ignore them?
Attached Image (click to enlarge)
Click to Enlarge Name: AUDCADMonthly.png Size: 71 KB
  • #5,222
  • Jan 31, 2015 8:44am Jan 31, 2015 8:44am
Quoting Ivan-M
Dear Alfonso, thank you very much for your reply! If you don't mind I would like to ask one more question. I've just watched your video "Trading Forex supply and demand imbalances with the bigger picture trend" and I'm trying to analyze HTF. When watching the video everything is clear but in real life everything becomes much more complicated for me. Am I right with two nearest SD zones on this chart? I'm not sure if zones №2 and 3 are valid. They did not remove any SD zones, they did not break any TL. Should we ignore them? {image}
You answered your own question Ivan by applying the rules to that TF, on a lower TF there will be demand, not on that one since it did not do what rules say they had to do in order to become validated.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,223
  • Jan 31, 2015 8:58am Jan 31, 2015 8:58am
Which one should be the valid trendline as per recent price action ?
as per my understanding 1 and 2 was my trendline when ascending trendline broken and peak -2 took out 1 demand level then i connected 1 and 2
when peak 3 formed and make lower low i connected 2 and 3,
after that price broke then trendline took out peak-3 and fall and created another peak-4
now as i am suppose to connect latest 2 peaks which 2 point i should connect ? 1 and 4 or 2 and 4 ?
i am asking this question because i saw in video point 1 and 4 connected and ignored point 2 which is still HH then P-4.


http://s24.postimg.org/5u7u8ntnp/screenshot_421.png
  • #5,224
  • Jan 31, 2015 12:58pm Jan 31, 2015 12:58pm
Quoting panoramia
{quote} You answered your own question Ivan by applying the rules to that TF, on a lower TF there will be demand, not on that one since it did not do what rules say they had to do in order to become validated. Cheers, Alfonso
OK, Alfonso, if I understand it right, there is no difference between HTF SD zones and entry TF SD zones? All of them must be validated for the same rules? If HTF is not validated due to the rules we will ignore this HTF zone. I mean we will not use this unvalidated HTF zone in our curve and we will not look for nested areas of SD on lower TFs?
  • #5,225
  • Feb 1, 2015 5:02am Feb 1, 2015 5:02am
Quoting Ivan-M
{quote} OK, Alfonso, if I understand it right, there is no difference between HTF SD zones and entry TF SD zones? All of them must be validated for the same rules? If HTF is not validated due to the rules we will ignore this HTF zone. I mean we will not use this unvalidated HTF zone in our curve and we will not look for nested areas of SD on lower TFs?
What is the current trend on AUDCAD monthly ? what should be my trendline there ?

as level 2 & 3 did not removed any supply level on the way up so we cant consider them as valid demand level on the other hand when we look left there is 1550+ pips fall in monthly chart and there is no supply level plotted on the way down (no DBD or RBD or 50% candle) but after that price did make higher high and created 2 valley .
so we could connect those valley and then we got an ascending trendline and we could consider it as an uptrend if we consider level 2&3 as valid demand level as they make higher high.
Now if we consider them as valid demand level (not for trading as they did not removed any SUP level or break TL) price recently took out that level 3 .
now we got a demand level taken out and we got 2 peaks on the top at 04-2014 & 08-2014 date.
so is it a down trend we got on AUDCAD monthly ?

i have another question that is, we know in order to have a trend price needs to take out 2 valid opposing area of SD what if price took out 1 area of SD and broke the trendline ? what should be the approach on that situation ? consolidating or in trend ? ( i see this scenario on AUDCAD WEEKLY)
  • #5,226
  • Feb 1, 2015 7:19am Feb 1, 2015 7:19am
Quoting rickyfx
{quote} What is the current trend on AUDCAD monthly ? what should be my trendline there ? as level 2 & 3 did not removed any supply level on the way up so we cant consider them as valid demand level on the other hand when we look left there is 1550+ pips fall in monthly chart and there is no supply level plotted on the way down (no DBD or RBD or 50% candle) but after that price did make higher high and created 2 valley . so we could connect those valley and then we got an ascending trendline and we could consider it as an uptrend if we consider...
On my opinion, we can't say that we're on a downtrend now. We don't have 2 peaks to connect, we don't have 3 CP to draw an aggressive TL, we don't have 2 DZ taken out. It looks like a bullish consolidation. If we had a higher TF than monthly with uptrend we would have to wait for price hits first DZ to start buying.
But now we have to wait.
  • #5,227
  • Feb 1, 2015 8:53am Feb 1, 2015 8:53am
Quoting Ivan-M
{quote} On my opinion, we can't say that we're on a downtrend now. We don't have 2 peaks to connect, we don't have 3 CP to draw an aggressive TL, we don't have 2 DZ taken out. It looks like a bullish consolidation. If we had a higher TF than monthly with uptrend we would have to wait for price hits first DZ to start buying. But now we have to wait.

aren't those Rally-base-drop ?

http://s24.postimg.org/bjso6pp7p/screenshot_422.png
  • #5,228
  • Feb 1, 2015 9:01am Feb 1, 2015 9:01am
Quoting rickyfx
{quote} aren't those Rally-base-drop ? {image}
I would say it's a single RBD but not 2 of RBDs Otherwise peaks and valleys can be seen everywhere.
  • #5,229
  • Feb 1, 2015 11:06am Feb 1, 2015 11:06am
Quoting rickyfx
Which one should be the valid trendline as per recent price action ? as per my understanding 1 and 2 was my trendline when ascending trendline broken and peak -2 took out 1 demand level then i connected 1 and 2 when peak 3 formed and make lower low i connected 2 and 3, after that price broke then trendline took out peak-3 and fall and created another peak-4 now as i am suppose to connect latest 2 peaks which 2 point i should connect ? 1 and 4 or 2 and 4 ? i am asking this question because i saw in video point 1 and 4 connected and ignored point...
Valid trendline would be 2--4. I don't know which analysis/chart of mine you are referrring to since you didn't post it so I can't verify it. But if all those 4 drops were peaks, the right trendline right now would be 2-4. I might have made a mistake (I make many as well) or left the trendline on my chart for some reason, but as per your screenshot, 2-4 would be the correct one right now.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,230
  • Feb 1, 2015 11:08am Feb 1, 2015 11:08am
Quoting Ivan-M
{quote} OK, Alfonso, if I understand it right, there is no difference between HTF SD zones and entry TF SD zones? All of them must be validated for the same rules? If HTF is not validated due to the rules we will ignore this HTF zone. I mean we will not use this unvalidated HTF zone in our curve and we will not look for nested areas of SD on lower TFs?
Rules apply to ALL timeframes the same, big timeframe, low timeframe, tiny, huge, all of them, otherwise the rules in post #1 would automatically be invalidated. Price is fractal, each chart has a trend and its own supply and demamd imbalances, rules apply the same to all of them, then you makle a top down analysis and make a decision on the trend direction and levels to take.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,231
  • Feb 1, 2015 11:11am Feb 1, 2015 11:11am
Quoting rickyfx
{quote} What is the current trend on AUDCAD monthly ? what should be my trendline there ? as level 2 & 3 did not removed any supply level on the way up so we cant consider them as valid demand level on the other hand when we look left there is 1550+ pips fall in monthly chart and there is no supply level plotted on the way down (no DBD or RBD or 50% candle) but after that price did make higher high and created 2 valley . so we could connect those valley and then we got an ascending trendline and we could consider it as an uptrend if we consider...
Valid descending trendline + 1 demand area taken out --> downtrend
Valid descending trendline + NO demand zone taken out --> consolidation

We're trading supply and demand imbalances, they need to be respected or disrespected in order to have a trend change.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,232
  • Feb 1, 2015 11:13am Feb 1, 2015 11:13am
Quoting rickyfx
{quote} aren't those Rally-base-drop ? {image}
There is a rally, a base with 5 x 50% candles and a drop. It has to be clear peak/valid as per definition, otherwise you will see valleys and peaks every 2 candles my friend Hope it makes sense

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,233
  • Feb 2, 2015 5:19am Feb 2, 2015 5:19am
Let's make it a little bit interactive here...

Anybody can tell what they think about EUR/USD and NZD/USD? What would be the IF THEN scenarios for those pairs? We'd need the Monthly, Weekly and Daily tiemframes posted for each pair and then create IF THEN scenarios for longs/shorts or taking no trade.

Looking forward to hearing from you views on those 2 currencies.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,234
  • Feb 2, 2015 8:49am Feb 2, 2015 8:49am
I will take a stab at EURUSD, new guy here still learning!

Monthly - EURUSD looks to have come off a monthly demand zone, while the trend still remains down.
Weekly - May be in the process of creating a new demand zone, but it has not yet been established. Trend still shows strongly down but it may have found bottom
Daily - It spent last week in a fairly tight range, bouncing off the weekly/monthly demand zone but not establishing direction. Could look to go short again if the price gets up to 1.15500 Daily supply area, this offers around 2:1 which may not be sufficient for a pending order.
  • #5,235
  • Feb 2, 2015 9:08am Feb 2, 2015 9:08am
Quoting mess7777
I will take a stab at EURUSD, new guy here still learning! Monthly - EURUSD looks to have come off a monthly demand zone, while the trend still remains down. Weekly - May be in the process of creating a new demand zone, but it has not yet been established. Trend still shows strongly down but it may have found bottom Daily - It spent last week in a fairly tight range, bouncing off the weekly/monthly demand zone but not establishing direction. Could look to go short again if the price gets up to 1.15500 Daily supply area, this offers around 2:1 which...
What about the screenshots? Reading all that text without any screenshots is a problem. It will force me and everybody to load up charts and compare all you are saying, this is why I had mentioned to upload screenshots.

Thanks,
Alfonso
Set and Forget supply and demand trading community
  • #5,236
  • Feb 2, 2015 9:13am Feb 2, 2015 9:13am
Quoting panoramia
Let's make it a little bit interactive here... Anybody can tell what they think about EUR/USD and NZD/USD? What would be the IF THEN scenarios for those pairs? We'd need the Monthly, Weekly and Daily tiemframes posted for each pair and then create IF THEN scenarios for longs/shorts or taking no trade. Looking forward to hearing from you views on those 2 currencies. Cheers, Alfonso
Hi Alfonso,

I haven't had time to study your methadolgy in detail yet, but with a cursory look at the EURUSD charts, I would have thought we're looking at a retracement and the possibility to look for shorts at around 1.16380.

If the monthly zone get's taken out first though, a re-test of 1.07650-1.0900 and short again.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: EURUSD Monthly.png Size: 23 KB
Click to Enlarge Name: EURUSD Weekly #2.png Size: 26 KB
Click to Enlarge Name: EURUSD Daily #4.png Size: 22 KB
  • #5,237
  • Feb 2, 2015 9:17am Feb 2, 2015 9:17am
Hello,
i will give it a try on EURUSD too. (No history for D1 curve, yet)
Shorts would be the better choice.

Let me know your thoughts. Cu
Attached Image(s) (click to enlarge)
Click to Enlarge Name: EURUSDMonthlySD.png Size: 73 KB
Click to Enlarge Name: EURUSDWeeklySD.png Size: 67 KB
Click to Enlarge Name: EURUSDDailySD.png Size: 64 KB
  • #5,238
  • Edited 9:42am Feb 2, 2015 9:28am | Edited 9:42am
Quoting mess7777
I will take a stab at EURUSD, new guy here still learning! Monthly - EURUSD looks to have come off a monthly demand zone, while the trend still remains down. Weekly - May be in the process of creating a new demand zone, but it has not yet been established. Trend still shows strongly down but it may have found bottom Daily - It spent last week in a fairly tight range, bouncing off the weekly/monthly demand zone but not establishing direction. Could look to go short again if the price gets up to 1.15500 Daily supply area, this offers around 2:1 which...

Screenshots
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 247 KB
Click to Enlarge Name: Screenshot2.png Size: 287 KB
Click to Enlarge Name: Screenshot3.png Size: 257 KB
  • #5,239
  • Feb 2, 2015 10:31am Feb 2, 2015 10:31am
Eurusd_top down analysis

monthly
Attached Image (click to enlarge)
Click to Enlarge Name: MONTHLY.png Size: 190 KB


weekly
Attached Image (click to enlarge)
Click to Enlarge Name: WEEKLY.png Size: 61 KB


daily
Attached Image (click to enlarge)
Click to Enlarge Name: DAILY.png Size: 40 KB
L.L.L.T
  • #5,240
  • Feb 2, 2015 10:39am Feb 2, 2015 10:39am
Alfonso,

I have a question regarding the creation of new zones.

In this picture we see that point 2 is a reaction from point 1, which is a weekly Demand zone. Now, is point 2 a new demand zone in itself since it made a higher high and took out a supply zone above? I cannot figure this out, since it is an obvious reaction from a previous demand zone. Sorry if you've mentioned this already but I may have missed this part.

Attached Image (click to enlarge)
Click to Enlarge Name: nzdjpy-kar-w1-karoll-jsc.png Size: 52 KB


This situation happens very often and I get confused when a trying to differentiate between a new zone and just a reaction (even if it made a high high).

Thank you,

Boris
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