Supply and demand in a nutshell by Alfonso Moreno | Page 279 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #5,561
  • May 4, 2015 5:54am May 4, 2015 5:54am
Hi Alfonso,

Could you please help me understand something here. On the USD/SGD monthly chart:

Candle 2 is the one that causes the removal of the monthly supply level on the left.

Candle 1 however is a 50%-candle and is below Candle 2.

Which in this case is the correct Demand zone - the 50% candle (1) or candle 2, that actually removes the opposing supply.
I'm wondering since this situation is new to me, and I think I've seen you classifying only candle 1 as demand in such cases before...

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Thanks,
Boris
  • #5,562
  • May 4, 2015 8:38am May 4, 2015 8:38am
Quoting PacnyTuH0
Hi Alfonso, Could you please help me understand something here. On the USD/SGD monthly chart: Candle 2 is the one that causes the removal of the monthly supply level on the left. Candle 1 however is a 50%-candle and is below Candle 2. Which in this case is the correct Demand zone - the 50% candle (1) or candle 2, that actually removes the opposing supply. I'm wondering since this situation is new to me, and I think I've seen you classifying only candle 1 as demand in such cases before... {image} Thanks, Boris
Boris, it would be much easier for you to detect basing candles if you used the Rectangle Reader indicator I've developped but I guess you are not using Metatrader. The indicator displayes a dot on all 50% candles. Not all 50% are correct levels either.

There are occasions where a non 50% candle can be demand, it has to be a Marubozu candle, not the case on candlestick number 2 or 1. Price is now reacting to a previous broken supply zone that is acting as a flip zone.

Hope it helps.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,563
  • May 4, 2015 8:42am May 4, 2015 8:42am
Quoting panoramia
{quote} Boris, it would be much easier for you to detect basing candles if you used the Rectangle Reader indicator I've developped but I guess you are not using Metatrader. The indicator displayes a dot on all 50% candles. Not all 50% are correct levels either. There are occasions where a non 50% candle can be demand, it has to be a Marubozu candle, not the case on candlestick number 2 or 1. Price is now reacting to a previous broken supply zone that is acting as a flip zone. Hope it helps. Cheers, Alfonso

Thank you,

Now it's clear that candle 2 is not demand I guess. Could you please point out where is the nearest monthly demand on my chart? Isn't it candle 1?
  • #5,564
  • May 4, 2015 9:17am May 4, 2015 9:17am
Quoting PacnyTuH0
{quote} Thank you, Now it's clear that candle 2 is not demand I guess. Could you please point out where is the nearest monthly demand on my chart? Isn't it candle 1?
You didn't upload the Monthly chart Boris. Can you upload it with the Monthly zones that you see? We'll see if they are correctly drawn.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,565
  • May 4, 2015 9:22am May 4, 2015 9:22am
Quoting panoramia
{quote} You didn't upload the Monthly chart Boris. Can you upload it with the Monthly zones that you see? We'll see if they are correctly drawn. Cheers, Alfonso
This is the monthly chart (top left corner)

This is how I see it...Let me know if I missed something

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Thanks
  • #5,566
  • May 4, 2015 9:48am May 4, 2015 9:48am
Quoting panoramia
{quote} Boris, it would be much easier for you to detect basing candles if you used the Rectangle Reader indicator I've developped but I guess you are not using Metatrader. The indicator displayes a dot on all 50% candles. Not all 50% are correct levels either. There are occasions where a non 50% candle can be demand, it has to be a Marubozu candle, not the case on candlestick number 2 or 1. Price is now reacting to a previous broken supply zone that is acting as a flip zone. Hope it helps. Cheers, Alfonso
I've downloaded rectangle reader from your website (set and forget), it was free download, but it don't display dot's on 50% candles.
  • #5,567
  • May 4, 2015 10:43am May 4, 2015 10:43am
Alfonso, Thanks for email: Weekly Commentary and I am learning from it.
So, I'd like to know if I learn your language: Weekly Demand in control (on USD/CAD post below).
After I checked out page 1 on this thread, it is equal to Weekly Uptrand is in control (in this case), correct?

http://www.set-and-forget.com/mails/...015/usdcad.png


On Page 1
_________
SUPPLY AND DEMAND IN CONTROL

WHAT DEFINES AN UPTREND OR A DOWNTREND AT ANY GIVEN TIMEFRAME?
Each timeframe can have a different trend. Let me define my idea of a trend. Remember it's just my idea of a trend, it makes sense to me so I'm using it. Does it make sense to you? Use it then. Since we are primarily working with supply and demand imbalances, making a higher higher or a lower low does not necessarily mean we continue on the existing trend.

  1. UPTREND: demand areas are being respected, supply areas are being taken out.
    A higher high SHOULD remove previous supply to validate the demand zone

    You must ask yourself: has the previous supply being removed?
    If previous supply is not taken out, I won't validate the origin of a higher high as demand
  2. DOWNTREND: supply areas are being respected, demand areas are being taken out.
    A lower low SHOULD remove previous demand to validate the supply zone

    You must ask yourself: has the previous demand being removed?
    If previous demand is not taken out, I won't validate the origin of a lower low as supply
    ​

Simple is powerful all the time.
  • #5,568
  • May 5, 2015 3:08am May 5, 2015 3:08am
Quoting karolisl
{quote} I've downloaded rectangle reader from your website (set and forget), it was free download, but it don't display dot's on 50% candles.
It displays dots automatically, maybe your template is got the same color background as the white dots.

Also, are you sure you removed old one and installed new files? I've done it this morning to check if uploaded files are correct and it works like charm, not a single issue.

I loaded a brand new USIndex chart, the default template was loaded and I see the white dots by default. I use the same files you are using.

BasingBarShow setting has to be set to true in order to see the 50% dots, but that's true always by default. I just can't duplicate your problem, you must be doing something wrong on your side. Allow DLL needs to be checked on the indicator.

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Set and Forget supply and demand trading community
  • #5,569
  • May 5, 2015 3:10am May 5, 2015 3:10am
Quoting RiverTrader
Alfonso, Thanks for email: Weekly Commentary and I am learning from it. So, I'd like to know if I learn your language: Weekly Demand in control (on USD/CAD post below). After I checked out page 1 on this thread, it is equal to Weekly Uptrand is in control (in this case), correct? ​
No, you are mixing up terms my friend.

A weekly uptrend has nothing to do with a Weekly demand zone in control

A zone can be in control but that does not mean with are in a trend, it's just a zone in control, nothing else. We could have had a trendline break and supply could be in control, we'd have bullish consolidation then, not un uptrend.

Hope it makes sense

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,570
  • May 5, 2015 3:12am May 5, 2015 3:12am
Quoting PacnyTuH0
{quote} This is the monthly chart (top left corner) This is how I see it...Let me know if I missed something {image} Thanks
It's correct my friend. Thanks for sharing your chart!
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,571
  • May 5, 2015 3:12am May 5, 2015 3:12am
EUR/CAD has a clear Monthly and Weekly downtrend. Price has reacted to a counter-trend Monthly Demand Zone (against current trend) and rallied all the way up to a valid Weekly supply zone (red dash lines), with a nested Daily supply at the proximal line and reacting to it. Valid short since Monthly and Weekly are in a downtrend.

Short bias

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Set and Forget supply and demand trading community
  • #5,572
  • May 5, 2015 3:13am May 5, 2015 3:13am
GBP/USD is reacting to a Weekly Supply zone with a bigger picture Monthly and Weekly downtrend. Price reacted to Weekly supply (red dash lines) and formed a dark cloud cover on the Daily chart and dropping. Potential Daily supply zone IF descending trendline is broken on the Daily chart with a full OCHL candle.

Short bias

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Set and Forget supply and demand trading community
  • #5,573
  • May 5, 2015 3:13am May 5, 2015 3:13am
USD/CAD is got Daily demand zone and Weekly demand zone in control after a strong drop in price. No Daily supply until much higher nested within a Weekly supply zone that caused the break of a Weekly ascending trendline. If price removes D1 resistance (not supply because it didn't take out any opposing demand zone), we could have some longs opportunities all the way up to Daily supply zone higher.

Long bias until new weekly supply is in control

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Set and Forget supply and demand trading community
  • #5,574
  • May 6, 2015 1:40am May 6, 2015 1:40am
Hi Alfonso,
How trade eur/usd when now weekly supply is in control and monthly demand is in control at the same time..?
  • #5,575
  • May 6, 2015 2:07am May 6, 2015 2:07am
Quoting karolisl
Hi Alfonso, How trade eur/usd when now weekly supply is in control and monthly demand is in control at the same time..?
There are rules for that my friend, if a higher timeframe demand is in control, shorts are lower odds. We use trendlines to assess entry timeframe and all that, the same applies to any currency or instument. There have already been counter-trend longs on euro's Daily at the bottom of the MN DZ reaction, with a new D1 DZ that broke D1 descending trendline. There are rules for that as explained on many occassions.

Also, uploading charts help, because many that read you don't know which zones you are talking about.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,576
  • May 6, 2015 2:09am May 6, 2015 2:09am
next time i will upload, now i'm at work and use my phone to read forum..
  • #5,577
  • May 6, 2015 3:42am May 6, 2015 3:42am
I wanted to share with you a great analogy one of our fellow traders came up with while testing the rules on Forex Tester. He's realized about very important things and where most of his losses happens. Thanks Steve for such a great analogy.

Read below the exact words he posted this morning.

The Curve and the Ocean

What I have learned about FT2 / the market and the lessons I am learning.

The market is like the Ocean , constantly in motion , you can stick your toe in at any time -its always moving!, you don't have to chase trades or be worried you are missing anything its always there. you have to be careful with your surfboard as it doesn't always take you to where you want to go , sometimes there are waves against you and sometimes there are waves moving away from you and sometimes the water just ebbs and flows forward and back meandering going nowhere. what happens to me is i jump in with my board too near the top of the wave an try to ride it but go over the top and get wiped out with a big drop to the bottom. (3 consecutive CPs, too high in the curve Monthly or Weekly curve) this is where i have been having most of my losses lately. I need to ride the wave down low from the trough to the top crest and get off before the wave starts to break down (engulf).

Also i forget sometimes that i am surfing in the small bay(entry timeframe) and the larger waves from the open ocean can flatten me if i come against them. ( Fractality & bigger picture)

Have a great day! Let the sun be with you
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,578
  • May 6, 2015 3:48am May 6, 2015 3:48am
Hello Alfonso!
Thank you for this thread. I contacted you the other day about your spreadsheet and am now working my way back through your rules.

I have one question:
In your rules you say "We want that the potential imbalance to consolidate away from the origin (base) at least with a full OCHL candle (Open, Close, High, Low) and provide us with a 2:1 imbalance (twice the width of the base)".

I don't understand what you mean by this...could you please clarify and give a picture example?

Your assistance with this would be much appreciated!
  • #5,579
  • May 6, 2015 6:13am May 6, 2015 6:13am
Really this is the market



Quoting panoramia
I wanted to share with you a great analogy one of our fellow traders came up with while testing the rules on Forex Tester. He's realized about very important things and where most of his losses happens. Thanks Steve for such a great analogy. Read below the exact words he posted this morning. The Curve and the Ocean What I have learned about FT2 / the market and the lessons I am learning. The market is like the Ocean , constantly in motion , you can stick your toe in at any time -its always moving!, you don't have to chase trades or be worried you...
  • #5,580
  • May 6, 2015 6:44am May 6, 2015 6:44am
Quoting forexchiq
Hello Alfonso! Thank you for this thread. I contacted you the other day about your spreadsheet and am now working my way back through your rules. I have one question: In your rules you say "We want that the potential imbalance to consolidate away from the origin (base) at least with a full OCHL candle (Open, Close, High, Low) and provide us with a 2:1 imbalance (twice the width of the base)". I don't understand what you mean by this...could you please clarify and give a picture example? Your assistance with this would be much appreciated!

This is all explained in Post #1 and a few webinar videos. Please, check out the posts and the webinars on how to draw levels. It's all there
Cheers,
Alfonso
Set and Forget supply and demand trading community
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