Supply and demand in a nutshell by Alfonso Moreno | Page 271 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #5,401
  • Feb 26, 2015 5:10am Feb 26, 2015 5:10am
Quoting Solomon1a
{quote} Drawing TL is crucial and very important part of trading, and i dont think that any indicator can perform this perfectly.
We have very clear rules to draw the trend line. Right?
Therefore, I think it is POSSIBLE to code an indicator to draw trendline as we want.

Hoping that some have coded that indicator.
Thanks!
  • #5,402
  • Feb 26, 2015 6:11am Feb 26, 2015 6:11am
Quoting DoHung
{quote} We have very clear rules to draw the trend line. Right? Therefore, I think it is POSSIBLE to code an indicator to draw trendline as we want. Hoping that some have coded that indicator. Thanks!
There are clear rules but many nuances, I've tried to code it and made it work 90% of the times, but not fully so not using it. I prefer to draw them manually, it takes me no time and I read price action myself.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,403
  • Feb 26, 2015 11:33am Feb 26, 2015 11:33am
I have a question regarding the inheritance rule. Does it apply to the third rule by which a zone can be validated - when there is no opposing supply to be removed, a potential demand is valid if there is 3:1 room to the nearest supply? I hope the picture speaks more clearly. Thanks.

One additional question: if we can draw a new TL by connecting two valleys, but there is no opposing supply to be removed (the nearest supply is farther than 3:1), can we say we have a new uptrend - please refer to the attached chart, I mean connecting the valleys at the blue and grey zones.
Thanks for clarification
Attached Image (click to enlarge)
Click to Enlarge Name: AC MN.png Size: 36 KB
  • #5,404
  • Edited 1:49pm Feb 26, 2015 1:32pm | Edited 1:49pm
Quoting Carousel46
I have a question regarding the inheritance rule. Does it apply to the third rule by which a zone can be validated - when there is no opposing supply to be removed, a potential demand is valid if there is 3:1 room to the nearest supply? I hope the picture speaks more clearly. Thanks. One additional question: if we can draw a new TL by connecting two valleys, but there is no opposing supply to be removed (the nearest supply is farther than 3:1), can we say we have a new uptrend - please refer to the attached chart, I mean connecting the valleys at...
It looks like although the grey area has a target of 3:1 ,but it is not demand as it has not yet removed any supply (the zone is now overshot also), the blue level is demand by default as it caused the break of the. Descending aggressive TL .

A new upward TL could have been drawn from the first valley (blue) to the next valley (grey) as the second valley made a higher low and higher high, but TL is now broken with conviction , (OHLC candle after the TL break).

if hypothetically the grey one had removed supply and was valid demand and the blue one wasn't , it would inherit validity from the one above.


hopefully someone else can clarify as I am also on the learning curve.
  • #5,405
  • Feb 26, 2015 1:38pm Feb 26, 2015 1:38pm
This is my USDCAD analysis. Monthly up, WK up, Daily consolidation (grey demand broken). Price bouncing from MN and WK SZ - no longs now. Need to wait for a pullback into fresh WK demand to go long on Daily set and forget. OR after the TL break and new supply on daily (within HTF supply) we can go short on retest.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: UC MN.png Size: 40 KB
Click to Enlarge Name: USDCADWeekly.png Size: 28 KB
Click to Enlarge Name: USDCADDaily.png Size: 34 KB
  • #5,406
  • Feb 26, 2015 1:42pm Feb 26, 2015 1:42pm
Quoting Fatyflathead
{quote} It looks like although the grey area has a target of 3:1 ,but it is not demand as it has not yet removed any supply, the blue level is demand by default as it caused the break of the. Descending aggressive TL . A new upward TL could have been drawn from the first valley (blue) to the next valley (grey) as the second valley made a higher low and higher high, but is now broken with conviction , (OHLC candle after the TL break). if hypothetically the grey one was valid demand and the blue one wasn't , it would inherit validity from the one...
I think that the third rule of validation says that no opposing level needs to be removed if the nearest level is at 3:1 distance. The removal point is included in another rule - a level is valid if it removes the opposing level. A clarification would be very welcome indeed.
  • #5,407
  • Feb 26, 2015 9:54pm Feb 26, 2015 9:54pm
Quoting panoramia
{quote} There are clear rules but many nuances, I've tried to code it and made it work 90% of the times, but not fully so not using it. I prefer to draw them manually, it takes me no time and I read price action myself. Cheers, Alfonso
Hi Alfonso,

Thank you very much for your sharing of SD. That's the great topic I have ever read on FF.
By the way, could you please share the TrendLine Indicator (that may work 90% is ok).

Thanks!
Cheer!
  • #5,408
  • Feb 27, 2015 12:04am Feb 27, 2015 12:04am
Quoting DoHung
{quote} Hi Alfonso, Thank you very much for your sharing of SD. That's the great topic I have ever read on FF. By the way, could you please share the TrendLine Indicator (that may work 90% is ok). Thanks! Cheer!
Thanks for your words my friend. Sorry but I can't share that indicator, it's still under development and not public. I am sure you understand
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,409
  • Feb 27, 2015 3:02am Feb 27, 2015 3:02am
Quoting Carousel46
I have a question regarding the inheritance rule. Does it apply to the third rule by which a zone can be validated - when there is no opposing supply to be removed, a potential demand is valid if there is 3:1 room to the nearest supply? I hope the picture speaks more clearly. Thanks.
Inhereted levels under that circumtances are lower odds unless they are at an extreme. High odds levels are those that remove on opposing zone or breaks the TL and go with the bigger picture trend, or realigning with it

Quote
One additional question: if we can draw a new TL by connecting two valleys, but there is no opposing supply to be removed (the nearest supply is farther than 3:1), can we say we have a new uptrend - please refer to the attached chart, I mean connecting the valleys at the blue and grey zones. Thanks for clarification

An uptrend requires not only an ascending trendline, but also at least one supply zone taken out, else it will just be a potential correction, former trendline will be the valid one (obviously broken already if we have an ascending one)

Hope it makes sense and it's clear.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,410
  • Edited 4:31am Feb 27, 2015 3:05am | Edited 4:31am
Quoting Carousel46
This is my USDCAD analysis. Monthly up, WK up, Daily consolidation (grey demand broken). Price bouncing from MN and WK SZ - no longs now. Need to wait for a pullback into fresh WK demand to go long on Daily set and forget. OR after the TL break and new supply on daily (within HTF supply) we can go short on retest. {image} {image} {image}
Perfect analysis on USD/CAD my friend, I can't add anything to it, nice IF then scenario.
The only thing I would need to add is that there is a D1 continuation pattern of demand right underneath the one you drew, it's the one holding price

Keep it up

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,411
  • Feb 27, 2015 5:29am Feb 27, 2015 5:29am
AUD/USD 3 months in a downtrend after taking out 1 DZ and allowing for a descending TL, room to drop to lower 3M DZ at 6M DZ to realign
Previous 3 months and 6 months demand zone was taken out by a 3 months supply imbalance at around 0.95000

The longer term 3 months picture is clearly down, price is now retracing a bit, but if we hit valid weekly or monthly supply zone, audusd will most likely start dropping again since the trend is clearly down and lots of room to drop to opposing 3 months demand zone.

The blue ascending trendline is the 6 months trendline

Hope it helps a bit.
Cheers,
Alfonso

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 138 KB
Set and Forget supply and demand trading community
  • #5,412
  • Feb 28, 2015 2:54pm Feb 28, 2015 2:54pm
Quoting panoramia
{quote} Perfect analysis on USD/CAD my friend, I can't add anything to it, nice IF then scenario. The only thing I would need to add is that there is a D1 continuation pattern of demand right underneath the one you drew, it's the one holding price Keep it up Cheers, Alfonso
Thank you very much for your answers and warm words. Nothing else is more encouraging to work even harder, maybe except a parabolic equity curve
  • #5,413
  • Mar 2, 2015 3:01am Mar 2, 2015 3:01am
Quoting panoramia
{quote} The only thing I would need to add is that there is a D1 continuation pattern of demand right underneath the one you drew, it's the one holding price Keep it up Cheers, Alfonso
Hi Alfonso,
I am a little confused about the demand you wrote about. I drew the grey CP, because it was the most obvious to my eyes. You drew the light blue just below. Why? Is it because it is the first bar of the stair step PA after a big move? This kind of PA is very frequent. Thank you.
Attached Image (click to enlarge)
Click to Enlarge Name: UC Daily.png Size: 21 KB
  • #5,414
  • Mar 2, 2015 4:18am Mar 2, 2015 4:18am
Quoting Carousel46
{quote} Hi Alfonso, I am a little confused about the demand you wrote about. I drew the grey CP, because it was the most obvious to my eyes. You drew the light blue just below. Why? Is it because it is the first bar of the stair step PA after a big move? This kind of PA is very frequent. Thank you. {image}
The lower blue level I drew was the first pause in the market after a strong rally on USD/CAD. It was a D1 CP continuation pattern of demand. Then there was a level on top and as you mentioned, there was a stair step level formation, normally price retraces to the origin of the move up, that is, the D1 CP demand zone in blue. Makes sense?

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,415
  • Mar 2, 2015 4:25am Mar 2, 2015 4:25am
Quoting Carousel46
{quote} Hi Alfonso, I am a little confused about the demand you wrote about. I drew the grey CP, because it was the most obvious to my eyes. You drew the light blue just below. Why? Is it because it is the first bar of the stair step PA after a big move? This kind of PA is very frequent. Thank you. {image}
There is also a triangle formation on Daily (see red trendlines). Daly is ranging, it can break out in any direction. We must wait for new imbalances to be created and a clear trend on the Daily. We must wait.

Cheers,
Alfonso

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 51 KB
Set and Forget supply and demand trading community
  • #5,416
  • Mar 2, 2015 7:48am Mar 2, 2015 7:48am
Quoting panoramia
{quote} The lower blue level I drew was the first pause in the market after a strong rally on USD/CAD. It was a D1 CP continuation pattern of demand. Then there was a level on top and as you mentioned, there was a stair step level formation, normally price retraces to the origin of the move up, that is, the D1 CP demand zone in blue. Makes sense? Cheers, Alfonso
Its clear now, thanks. I know that all the nuances cannot be described by the rules so I need an explanation on them.
  • #5,417
  • Mar 2, 2015 10:43am Mar 2, 2015 10:43am
EURGBP analysis. Daily is a bit tricky to draw correct levels.

MN down - a lot of room to the next demand. WK down, Daily down.
Short entry is possible on the narrow Daily CP - potential 10:1 to WK demand proximal line or at the next D1 supply. But the market formed 3 CPs in a row and its possible it will make a pullback to ,7545 - Daily supply inside WK supply where set-and-forget short entry is possible. At that time the daily TL will be broken so the entry can be only inside WK supply.
The Daily CP at .7375 has a bad base, not good for entry, but it lies at the WK supply proximal line and last month low - short only with confirmation or rather not at all.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: EURGBPMonthly.png Size: 35 KB
Click to Enlarge Name: EURGBPWeekly.png Size: 35 KB
Click to Enlarge Name: EURGBPDaily.png Size: 36 KB
  • #5,418
  • Edited Mar 3, 2015 4:02am Mar 2, 2015 9:09pm | Edited Mar 3, 2015 4:02am
Quoting Carousel46
This is my USDCAD analysis. Monthly up, WK up, Daily consolidation (grey demand broken). Price bouncing from MN and WK SZ - no longs now. Need to wait for a pullback into fresh WK demand to go long on Daily set and forget. OR after the TL break and new supply on daily (within HTF supply) we can go short on retest. {image} {image} {image}
Carousel46,

I am learning closely on every post, so according to your charts, the set and forget on Daily would be near 1.19830.
Am I reading it correctly?
Simple is powerful all the time.
  • #5,419
  • Mar 3, 2015 8:35am Mar 3, 2015 8:35am
Quoting RiverTrader
{quote} Carousel46, I am learning closely on every post, so according to your charts, the set and forget on Daily would be near 1.19830. Am I reading it correctly?
Rivertrader, if youre talking about the long entry, then 1,1983 is a Daily CP, that wouldnt be valid for a set and forget, because when price hits it, the daily upTL would be broken, making all the CPs below invalid. Price must fall into the fresh weekly demand which is at 1,1626. Because it is so far, we may have a new downtrend on daily in the meantime and we could be taking shorts and the WK CP could a good target. It is countertrend short, but price is bouncing from WK supply nested withing MN supply, so shorts are possible if new daily downtrend starts. I hope Im not talking BS , Im still learning too.
  • #5,420
  • Mar 3, 2015 12:58pm Mar 3, 2015 12:58pm
Quoting Carousel46
{quote} Rivertrader, if youre talking about the long entry, then 1,1983 is a Daily CP, that wouldnt be valid for a set and forget, because when price hits it, the daily upTL would be broken, making all the CPs below invalid. Price must fall into the fresh weekly demand which is at 1,1626. Because it is so far, we may have a new downtrend on daily in the meantime and we could be taking shorts and the WK CP could a good target. It is countertrend short, but price is bouncing from WK supply nested withing MN supply, so shorts are possible if new daily...
Quote: This is my USDCAD analysis. Monthly up, WK up, Daily consolidation (grey demand broken). Price bouncing from MN and WK SZ - no longs now. Need to wait for a pullback into fresh WK demand to go long on Daily set and forget. OR after the TL break and new supply on daily (within HTF supply) we can go short on retest.

Carousel46, yes i was talking about long entry and that's how I was confused. As, you didn't have text explanation on the charts you post.
You said, Need to wait for a pullback into fresh WK demand to go long on Daily set and forget.
and according to wk chart you post, that's how I found 1.19830 to go long entry.

I am not countertrend trader, so I prefer to learn how to long on this pair. Can you explain what you said on your chart?
Simple is powerful all the time.
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