Supply and demand in a nutshell by Alfonso Moreno | Page 263 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #5,241
  • Feb 2, 2015 10:56am Feb 2, 2015 10:56am
NZDUSD Monthly
Trendline broken, 2 level of previous valid demand taken out so its a downtrend on Monthly chart. but we can not draw trend line as we dont have 2 peaks or 3 cp pattern.


http://s24.postimg.org/6k4v9mfad/screenshot_439.png


WEEKLY
Price taken out more then 2 valid demand level & we got 2 peaks to connect. So Weekly also downtrend.

http://s24.postimg.org/5zpu6xm1x/screenshot_443.png


Daily

Daily is also down price takeout some old demand level on the way down but um not sure about the trendline on daily chart over there.
if the marked Ellipse zone is a peak then the trendline is ok. I hope alfonso will share his expert opinion about this.
Price at a old fresh demand level so i will not short here if price pullback and break trendline then i will w8 for weekly fresh level of supply to short again.

http://s24.postimg.org/9tjag33dx/screenshot_441.png


Source of the Daily demand zone

http://s24.postimg.org/cc4zgrp45/screenshot_442.png
  • #5,242
  • Feb 2, 2015 3:28pm Feb 2, 2015 3:28pm
Quoting PacnyTuH0
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. {image} This situation happens very often and I get confused when a trying to differentiate between a new zone and just a reaction...
Hi Boris,

You must differentiate between a trending market and a non-trending market, fresh and fresh and original supply and demand imbalances.

In Post#1 and several webinars we talk about it. When we're trending we just need fresh levels, if they are original better but there is no need. We want original levels if we want to try counter-trend.

These are the latest trendlines that happened, the break of the trendlines caused the creation of new imbalances. Now price is too low to short on a fresh WK DZ
Cheers,
Alfonso

Attached Image (click to enlarge)
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Set and Forget supply and demand trading community
  • #5,243
  • Feb 2, 2015 3:33pm Feb 2, 2015 3:33pm
Quoting PacnyTuH0
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. {image} This situation happens very often and I get confused when a trying to differentiate between a new zone and just a reaction...
Take a look at the attached charts

MONTHLY
Monthly is in a downtrend. Even if you did not have the possibility to draw a descending trendline as you mentioned, there were +2 demand zones taken out, as per the rules the monthly chart would be down. No matter how you look at the monthly chart, EUR/USD is on a monthly downtrend, not consolidation.


WEEKLY AND DAILY
If the descending D1 trendline is broken, as per the realignment rules the next selling spot would be 1 TF higher than the one that has the trendline break. There is a weekly supply zone before the daily zones you have drawn much higher. You would be skipping D1 and Weekly zones, and waiting much hugher at the monthly supply

Cheers,
Alfonso
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Click to Enlarge Name: Screenshot1.png Size: 209 KB
Set and Forget supply and demand trading community
  • #5,244
  • Feb 2, 2015 3:36pm Feb 2, 2015 3:36pm
Thanks for motivation videos on thread Alfonso, I really need them. I have been trying and trying, but i just dont get. Feels like market does not respect zones at all. I have been trying to test it with forex tester for a month and a half. And still cant handle it. I think i have missed something imporant, or i havent understand something right.

Edit: You make it look so easy and understandable in your videos, but when i jump in market it all look so different and hard.
  • #5,245
  • Feb 2, 2015 4:20pm Feb 2, 2015 4:20pm
Quoting JackAntigua
{quote} 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. {image} {image} {image}
Quoting JoeMcCool
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 {image} {image} {image}
Bias is definetely shorts on EUR/USD.

Price has been basing for 5 days, descending trendline being respected, a D1 supply zone right above at 20 EMA confluence. WK supply a bit higher. Basing that much underneath a level is normally not a good sign to trade against, moreover if Monthly demand zone is in control, price could retrace higher into weekly supply zone
Monthly demand zone in control

Cheers,
Alfonso

Attached Image (click to enlarge)
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Set and Forget supply and demand trading community
  • #5,246
  • Feb 2, 2015 4:24pm Feb 2, 2015 4:24pm
Quoting medIce
Thanks for motivation videos on thread Alfonso, I really need them. I have been trying and trying, but i just dont get. Feels like market does not respect zones at all. I have been trying to test it with forex tester for a month and a half. And still cant handle it. I think i have missed something imporant, or i havent understand something right. Edit: You make it look so easy and understandable in your videos, but when i jump in market it all look so different and hard.
Don't give up my friend, you can't expect to get it in 1 month and a half of testing. It takes much more than that. Things are easy when you know how to do them, it may look easy when I hold the webinars or do the analysis, but it's not. It's just that I have a bit more of screentime than you and I've tested rules for months. You just need that, ask, ask, practice practice and practice.

Zones are respected as if they were magical, if you see zones are not being respected then you must be doing something wrong, if you are trading smaller timeframes like H1 and lower, you will see many many of them not working, the lower the timeframe, the more levels you will see, the more noise and the more experienced trader you will need to be. By the way, which are the timeframes you use for your top down analysis?

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,247
  • Feb 2, 2015 4:28pm Feb 2, 2015 4:28pm
Quoting rickyfx
NZDUSD Monthly Trendline broken, 2 level of previous valid demand taken out so its a downtrend on Monthly chart. but we can not draw trend line as we dont have 2 peaks or 3 cp pattern. {image} WEEKLY Price taken out more then 2 valid demand level & we got 2 peaks to connect. So Weekly also downtrend. {image} Daily Daily is also down price takeout some old demand level on the way down but um not sure about the trendline on daily chart over there. if the marked Ellipse zone is a peak then the trendline is ok. I hope alfonso will share his expert opinion...
Ricky, I agree with you that NZD/USD is in a downtrend, a descending trendline cannot be drawn but we have the break of the ascending one there, broken and a brand new Monthly supply zone formed right after that break, with nested weekly and daily supply.

Shorts is the way to go, but now D1 demand zone in control, a bigger retracement is needed to D1 or WK supply.
Cheers,
Alfonso

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 341 KB
Set and Forget supply and demand trading community
  • #5,248
  • Feb 2, 2015 4:36pm Feb 2, 2015 4:36pm
Edit: Deleted

Sorry, my bad
Trade what you see..
  • #5,249
  • Feb 2, 2015 4:38pm Feb 2, 2015 4:38pm
Thank you Alfonso,

However, I'm not sure you answered my question completely. I'm looking at it without whether the market is trending or ranging.

I was asking whether point 2 has now become Demand (for what reasons?) or whether it is just a reaction to point 1. If it is a reaction to point 1 then point 1 is an already used demand zone and is more likely to get penetrated, right?

On the opposite side, if Point 2 is now Demand (why now?) then it is not gonna be penetrated that easily.

How can I be sure that at Point 2 there are new buy orders waiting after price actually took them from Point 1?

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 85 KB


Sorry for bothering you, but I'm still scratching my head over these situations
  • #5,250
  • Edited 5:02pm Feb 2, 2015 4:49pm | Edited 5:02pm
Quoting PacnyTuH0
Thank you Alfonso, However, I'm not sure you answered my question completely. I'm looking at it without whether the market is trending or ranging. I was asking whether point 2 has now become Demand (for what reasons?) or whether it is just a reaction to point 1. If it is a reaction to point 1 then point 1 is an already used demand zone and is more likely to get penetrated, right? On the opposite side, if Point 2 is now Demand (why now?) then it is not gonna be penetrated that easily. How can I be sure that at Point 2 there are new buy orders waiting...
Looks like maybe you did not read/interpret my answer correctly or the way I expected. Fresh, non-fresh and orignal levels need a trend to be scored, if you ignore trend then you will take many non valid levels and ignore some valid ones. Trend is key in any top down analysis, be it supply or demand or any other strategy. So my answer is the one you needed if you want to follow the rules. Both are valid demand areas, fresh areas are used for trending markets, no matter if it's a reaction to a previous level or not.

Point 2 has become demand because it took out opposing supply, see my previous screenshot. An imbalance that breaks an ascending trendline becomes supply, as per the rules in post #1

Scatching your head over these scenarios is completely normal until you get more screentime and practice.

Cheers
Alfonso
Set and Forget supply and demand trading community
  • #5,251
  • Feb 3, 2015 12:02am Feb 3, 2015 12:02am
Hi Mr Alfonso and mates,

im short at a valid supply level on h4. now is at break even and still room to drop.
Attached Image (click to enlarge)
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passion and discipline
  • #5,252
  • Feb 3, 2015 12:03am Feb 3, 2015 12:03am
Quoting panoramia
{quote} Don't give up my friend, you can't expect to get it in 1 month and a half of testing. It takes much more than that. Things are easy when you know how to do them, it may look easy when I hold the webinars or do the analysis, but it's not. It's just that I have a bit more of screentime than you and I've tested rules for months. You just need that, ask, ask, practice practice and practice. Zones are respected as if they were magical, if you see zones are not being respected then you must be doing something wrong, if you are trading smaller...
Yeah i wont give up. I think i have drawn sup and dem wrong sometimes, cause i dont have your indicators on forextester2, but i think its good to learn to see them by own. I used h4, d1 and weekly for my analysis.
  • #5,253
  • Feb 3, 2015 1:58am Feb 3, 2015 1:58am
Quoting medIce
{quote} Yeah i wont give up. I think i have drawn sup and dem wrong sometimes, cause i dont have your indicators on forextester2, but i think its good to learn to see them by own. I used h4, d1 and weekly for my analysis.
I draw all my levels manually, both on metatrader and forex tester 2, no need of any indicator to do it for you. If you draw them yourself you will know why the level is there because you will be following the rules, if an indicator does it for you you will not gaining any experience drawing them.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,254
  • Feb 3, 2015 1:59am Feb 3, 2015 1:59am
Quoting rohule
Hi Mr Alfonso and mates, im short at a valid supply level on h4. now is at break even and still room to drop. {image}
Thanks for sharing your H4 supply setup on NZD/USD my friend. Good that short is working, looks like there is a lot of room to drop on the kiwi!

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,255
  • Feb 3, 2015 2:51am Feb 3, 2015 2:51am
Bias for AUD/USD is shorts based on supply and demand imbalances or any other strategy set of rules you might be using to assess the trend. Longs is out of the equation for high odds shorts.

  1. Monthly is down. Non fresh monthly demand zone has been taken out
  2. Weekly is down, new weekly supply zones higher
  3. Daily down, potential D1 supply zones being formed

Short is the way to go on new supply zones on H4 and Daily on AUD/USD.

Last night there was a high impact news, interest rate went from 2.5% to 2.25%, that is affecting the aussie negatively and it's helping the aussie drop lower and helped it remove the Monthly demand zone. Similar trades on other aussie pairs, also eur/aud, gbp/aud, etc.

Bias is selling australian dollars on new imbalances to short it, on AUD/JPY, AUD/CAD, AUD/SGD, etc.

If you have some setups on the aussie plan, it would be great that you shared them, but please attach multiple timeframe analysis so we can see what your thinking process is.

Cheers,
Alfonso

Attached Image (click to enlarge)
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Set and Forget supply and demand trading community
  • #5,256
  • Edited 9:03am Feb 3, 2015 6:58am | Edited 9:03am
Dear Alfonso, am I right with top-down analyses?
EURGBP
Monthly is down, Demand in control, no shorts
Attached Image (click to enlarge)
Click to Enlarge Name: EURGBPMonthly.png Size: 73 KB


WK is down, Demand in control, no shorts
Attached Image (click to enlarge)
Click to Enlarge Name: EURGBPWeekly.png Size: 66 KB


Daily is down, but wk & monthly are too low on the Curve. The nearest daily supply zone is right at 50% wk curve, not a good place to trade. The next Daily Fresh SZ is nested in WK SZ which is fresh but not original.
Attached Image (click to enlarge)
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NO TRADE NOW.
1. Wait when price hits WK SZ and go shorts on Daily with confirmation (original + fresh + brand new levels of supply if no Daily trend OR fresh brand new levels if Daily will be downtrend).
2. Wait for break out of monthly & wk demand, analyse again for possible shorts.
  • #5,257
  • Feb 3, 2015 9:41am Feb 3, 2015 9:41am
Quoting Ivan-M
Dear Alfonso, am I right with top-down analyses? EURGBP Monthly is down, Demand in control, no shorts {image} WK is down, Demand in control, no shorts {image} Daily is down, but wk & monthly are too low on the Curve. The nearest daily supply zone is right at 50% wk curve, not a good place to trade. The next Daily Fresh SZ is nested in WK SZ which is fresh but not original. {image} NO TRADE NOW. 1. Wait when price hits WK SZ and go shorts on Daily with confirmation (original + fresh + brand new levels of supply if no Daily trend OR fresh brand new...
Thanks for sharing your analysis with us on EUR/GBP. What you said makes sense. EUR/GBP is definetely down as per supply and demand analysis, it's a clear downtrend no matter which strategy or indicators you apply, this scenario is easy

I just wanted to point out one thing on the curve. Price is reacting to a Monthly demand zone, but the curve is measured only using valleys and peaks, CPs are used only when price is trending in the direction of the CP. The Monthly demand zone is a continuaton pattern, a continuation pattern (CP) is scored low if the trend is against it and not used to measured the other extreme of the curve. So your curve assessment is sort of incorrect/incomplete.

You missed drawing a Monthly supply zone, the one that caused the break of latest non fresh Monthly demand. If you can upload the screenshot later it would be great, you will see what I mean.

Hope it makes sense.
Alfonso
Set and Forget supply and demand trading community
  • #5,258
  • Feb 3, 2015 9:58am Feb 3, 2015 9:58am
I can't help feeling you boyz' are making things way more complicated than they need to be, everytime I read more than a couple of sentances I get a headache.

Surely, at the end of the day, it boils down to this:-

If the market is going up, long for long opportunities

If the market is going down, look for short opportunities

If you have no idea what the market is doing, do nothing
  • #5,259
  • Feb 3, 2015 10:05am Feb 3, 2015 10:05am
JackAntigua,

If this way of analyzing/trading makes it difficult to understand then I have no idea what would be an easy way to understand the markets. I suggest you read post 1 a few times and watch some videos on the Supply and Demand topic.

There is absolutely no easier way to understanding the markets than the Supply & Demand approach, believe me. Once you understand and start to apply it, trading will feel like a kid's game.
  • #5,260
  • Feb 3, 2015 10:26am Feb 3, 2015 10:26am
Quoting PacnyTuH0
JackAntigua, If this way of analyzing/trading makes it difficult to understand then I have no idea what would be an easy way to understand the markets. I suggest you read post 1 a few times and watch some videos on the Supply and Demand topic. There is absolutely no easier way to understanding the markets than the Supply & Demand approach, believe me. Once you understand and start to apply it, trading will feel like a kid's game.
Don't get me wrong, supply and demand I get totally, it's just all the jargon that I am finding inpenetrable.
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