Price Will Tell - Supply/Demand Price Action Trading

EURAUD W1 tech.

Although on the H1 TF, EURAUD is continuing to defy gravity and go up, the W1 picture is significant. Price has formed what to my eyes is a QM, which has emerged in quite an interesting place. On intraday I'm looking for buy setups again but always keeping an eye on the bigger picture.

EURJPY H4

One possibility (among many for what this pair may do) for next week.

Hi Simon - one of many possibilities for sure. interesting how different participants see the market- but I guess that's what makes a market isn't it? Form my limited experience I'd have looked at that upper level where your 'up" arrow is as an area to look for shorting opportunities. Curious as to why that second "up" arrow is shown there - do you see that as an area that looks to be taken out long? Obviously the market will tell us that, but interested to know your thinking on that - my chart below.

Hi dmostpips,

Yes, for sure, it's always interesting to see how market participants' views differ.

EJ's a funny at the moment. If one looks at the W1 chart for instance it would be pretty easy to hold the view that the bias is down, however, checking last week's play on EURAUD for example, just around the point that everyone was agreeing that the daily bias was down, that pair turned up and rallied for about 500 pips.

So often these moves accumulate in the lower timeframes, and to be fair, even though the H4 timeframe isn't that low, what I've noticed in EURJPY is that pair's desire to make these breakouts with HHs on the retests. The original chart is now annotated and in line format, which should hopefully look a little clearer. Of course, there's no reason why it can't turn from where you've said, but for me, when I'm looking at exactly what is going on now, I'm seeing more of a ppresence of the H4 buyers lurking in this market.

Thanks for posting; it's nice to be getting some chart discussion going.

Great thread Simon, have subscribed, will post some charts soon.

Thanks for sharing the analysis & clear chart / explanation. It adds a lot to compare to my own thinking and be ready for whatever the market offers.
Cheers.

Them and Us

The oldest trick in the book caught me out this morning when I bought just prior to news at an area that is quite high on the intra-day curve, even though on the Daily chart, GJ has given what for me is a bullish signal.

The flawed buy and the exit, is annotated on the M30 chart below. The original stop was below the blue box.



Once I get into an obviously flawed trade, the question is, how does my mindset, and of course the risk tolerance that I have set for this account, allow me to function as a trader in order to minimise the loss or even better still, hedge against it in order that I may cancel the loss altogether?

There was a time in the past whenever this market moved against me it felt personal. There was even a (albeit very brief) period when I assumed that it would benefit my trading if I could try and give a name to those moving the market; "Institutions", "Pro bulls", "Pro bears" etc. In my view, this kind of approach was nonsensical and if anything helped support a "Them and Us" notion that when the market was moving against me, it was personal.

I do use the word "they" when I describe those who are able to produced the bigger moves in price, however, this word simply refers to everyone else in the market other than me. Use of this word re-enforces the idea that I'm on my own trading this market, it does not, however, support the idea that the market is on a quest to hunt my own stops or try to identify me as a retail trader in order that it can "take me out", or for that matter that there are any other kind of over-arching conspiracies to prevent me from succeeding. I have to say that I no longer believe in any of these ideas. Sure, there are broker shenanigans, and I'm also not so naive to deny that at times, this market is the victim of manipulation (elements of the recent SNB debacle for example) but to be honest, this is a different conversation. Instead, I have decided on a daily basis to try and see the market for what it is. No more "Them and Us", just big buyers and sellers that, having moved price away from the origin of where they showed their hand, simply use all of the tools at their disposal, money basically, to bring the price back down to where they can fill their remaining orders and be on their merry way.

I want this thread to be of some use to others including myself. It can only do that by remaining focused on trading discussion and not resolve into some kind of trophy cabinet of completed profitable trades or even worse, "after-the-fact" entries that are already 25 pips in profit and still running. Posts like this belong in interactive trading threads or personal journals. On this basis I'm adding this final M5 chart from this morning to illustrate the method that I took in order to hedge against this morning's flawed buy entry and close the session on what is essentially break-even for this pair.

Rather than simply closing the original buy trade and taking the loss, one must factor in the Daily bullish signal. Once must also factor in the M30 demand base. These two points alone are not things that we can rationally consider if we get hot under the collar and start thinking of the draw-down as some kind of personal punishment that the market inflicted on us. The Daily and M30 factors came into play and once price started to retrace long on the M5 time-frame, two things were obviously going to happen:

1. The original loss would start to reduce

2. There may come an opportunity to hedge against that loss

The final chart is M5 and shows the final 2 buys that I entered in order to hedge against the loss and close overall at B/E +. My original plan was to leave one buy position running but by mistake I closed the upper buy first, which gave practically no room to move the stop. Nevertheless, moving the stop quickly is an absolute in this aspect of my trading plan, and the market nicked that stop out pretty quickly.

I'm sure others may have found a better way to handle situations like this but for me, the most important aspect of recovering losses is that this can only be achieved with the correct mindset, and that mindset is that there is no "Them and Us"; it is not personal.

A lot of people talk about supply/demand but based on what I can see on this thread it remains a concept misunderstood.

Why not enlighten us; with some clear charts?

Great post Simond. I really like your idea of making of your thread a place to discuss trading under the S/D frame and not just another thread to show winning trades. It's great to find someone with the same mindset.
I've also been thinking of hedging the losing trades based on the higher probability a good spotted S/D area can give. A floating loss until a new very clear area of either S/D comes along (might take several days). I'll put up the idea here for discussion in the future when I have expanded and shaped even more the concept.

Imbalance lvls are relevant because they show market abnomalies which have to be repaired. Indeed the purpose of a market is to facilitate transactions between buyers and sellers. However sometimes price rallies or drops too fast because of a huge supply(>demand) and therefore creates market abnomaly.

Abnomaly will be repaired (we don't know when and it's not important). Once the abnomaly is repaired the level isn't interesting anymore and traders should just focus on the markets abnomalies more than just S/D lvls.

Price always drops fast because of a huge supply over demand imbalance

This bit I agree with.

Your comments are welcome but please respect this thread, instead of fancy phrases (I appreciate English is not your first language) illustrate your point with some clear charts instead.

For example, GJ has had a bull run through London and NY. Why has price suddenly dropped from the blue box in the M5 time frame?

Let me add something else.

I know traders who would have sold GJ on the M5 TF as price was rising to the breakout line. This is not my flavour of trading, however, they would already be 50% off with the other half running. Do you think those guys care about the techie stuff? They're traders. They spot an imbalance and trade it in accordance with their edge.

And it's not that important. What matters is a price level with poor volume (with a low number of transactions), so a good trade location.

There is no edge in trading SD without understanding what does it really mean.

Dude, you should start your own thread.

Hi all, would like to give my view:

price dropped because of the significant supply marked, it is where supply consumed demand that lead to HH
this new supply is formed after hitting an H4 SR at 179.140 and getting strong rejection

isnt that the point of this thread ? To discuss the meaning of S/D ? In the chart you provided price breaks the key area of 1.091- 1.0915-set yesterday. Broke the area and tried to retrace back in, but was rejected. Hence the continued fall

In fact, with the previous chart, I make no apology for not having the energy to lock horns and discuss it.

Clear charts only in this thread.

I wish unabletrader well.