Supply and demand in a nutshell by Alfonso Moreno | Page 299 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #5,961
  • Sep 2, 2015 4:11am Sep 2, 2015 4:11am
Quoting John.
Thanks, alegargano! Thanks, Alfonso! Are you back home? Hope you enjoyed your travel a lot! Any photos available? I want to ask a question about good /bad base. Is it a good base for set & forget or it's better to work with confirmation with such bases? {image}
That looks like a good base on GBP/JPY H4, it has a great departure as well and price is reacting from higher timeframe Weekly supply on GBP/JPY. Shorts bias definitely.

I enjoyed my holidays in Thailand in August, didn't take too many pictures because weather was not good, raining, cloudy and overcast, pity

Here is a short timelapse I shot on one of the many places I visited.
Cheers,
Alfonso

https://vimeo.com/136362971
Set and Forget supply and demand trading community
  • #5,962
  • Sep 2, 2015 4:12am Sep 2, 2015 4:12am
Gold has a clear bigger picture downtrend. Weekly supply is in control (red dash lines), nested D1 supply zone triggered shorts.

Now opposing D1 demand zone is in control and has not been taken out, so potential D1 supply is not confirmed yet.
Gold might start consolidating for some days within these 2 opposing Daily imbalances, however bias is shorts.

Rally from D1 demand is not that great, containing small weak 50% candles on the way up.

Shorts require confirmation at Weekly supply.

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Set and Forget supply and demand trading community
  • #5,963
  • Sep 2, 2015 4:13am Sep 2, 2015 4:13am
AUD/USD continues to drop after break lower with lots of room to reach counter trend Monthly demand zone much lower at blue lines.

Potential D1 and Weekly supply zones being created on the way down for more shorts.

New 50% D1 continuation pattern being formed, if it breaks lower than this, breakout supply shorts could happen.

Short bias

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Set and Forget supply and demand trading community
  • #5,964
  • Sep 2, 2015 4:14am Sep 2, 2015 4:14am
EUR/USD has been bouncing off tested counter-trend Monthly demand zone, we now have an official Weekly uptrend after taking out a Weekly supply zone. New D1 demand zone nested within Weekly demand.

Euro was unable to close above Weekly supply with a Weekly candle (red line flip zone).

Long bias for now, Weekly and Daily uptrends, no set and forget shorts until higher at Monthly supply zone, all shorts require confirmation. If it breaks higher that
current Daily candle, we could have some H4 and lower timeframes demand zones created for intraday entries.

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  • #5,965
  • Sep 2, 2015 4:15am Sep 2, 2015 4:15am
Brent is reacting to a marubozu Weekly supply zone, nested D1 supply was triggered and price is dropping.
Daily created a bearish engulf, nested H4 supply zones within.

Bigger picture shorts bias, latest 3 days rally was just a retracement to Weekly supply for more shorts since we have a long term short bias, we can't go long against higher timeframe Weekly supply imbalances.

Brand new D1 demand zone created, don't go short too close to it. If price breaks lower than previous candles lows, we could have new continuation patterns for shorts.

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  • #5,966
  • Sep 2, 2015 5:36am Sep 2, 2015 5:36am
Can we take momentum trades on H4 if D1 opposing used-up zone is in control? But WK opposing zone is fresh and with us?
If yes, can we trade set and forget or must wait for confirmation? Or it's better to do nothing and wait when D1 DZ will be broken out?
There is a good example on AUDUSD:
WK = down / fresh SZ in control (bias is shorts)
D1 = down / but used-up DZ in control
H4 = down / but used-up DZ in control

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  • #5,967
  • Sep 2, 2015 6:06am Sep 2, 2015 6:06am
Alfonso, don't you think that last couple of months do not offer us as many good trading opportunities as usually? It seems that most currencies can't find the way to go. What do you think?
  • #5,968
  • Sep 2, 2015 10:01am Sep 2, 2015 10:01am
Quoting John.
Alfonso, don't you think that last couple of months do not offer us as many good trading opportunities as usually? It seems that most currencies can't find the way to go. What do you think?
There have been many opportunities to trade in August John, mostly on US pairs and exotics, pound and euro longs, and aussie shorts. I had quite a few while on holidays, and I know others traders who did similar, there were quite a few. I am also trading US Shares and there were many as well, the markets provided with many good trading opportunities.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,969
  • Sep 2, 2015 10:03am Sep 2, 2015 10:03am
Hi Alfonso,

I've often noticed that if a SD zone has tested an opposing fresh SD zone, it often looks like a good zone to be traded. As if it was opening the path when it reaches the opposing fresh SD zone, because it makes it no more fresh and is likely to be broken when reached again.
Have you noticed something like that?

Cheers,
Daniel
  • #5,970
  • Sep 2, 2015 12:58pm Sep 2, 2015 12:58pm
One more LOSS I'm losing belief...
EURNOK H4
WK/D1/H4 are up
WK/D1/H4 demand in control
H4 removed opposing supply
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  • #5,971
  • Sep 2, 2015 1:23pm Sep 2, 2015 1:23pm
Quoting John.
One more LOSS I'm losing belief... EURNOK H4 WK/D1/H4 are up WK/D1/H4 demand in control H4 removed opposing supply {image} {image} {image}
​

Hi John,

I think your demand zone is not valid on the third chart. It did'not remove an opposing zone, because the opposing zone was not a valid zone. But the demand zone before the trendline break was tradable.

Cheers ,
Daniel
  • #5,972
  • Sep 2, 2015 1:37pm Sep 2, 2015 1:37pm
Quoting dvarrin
{quote}​ Hi John, I think your demand zone is not valid on the third chart. It did'not remove an opposing zone, because the opposing zone was not a valid zone. But the demand zone before the trendline break was tradable. Cheers , Daniel
Hi Daniel, thanks for your comment. But it was tradable demand 100%.
1) DZ (B) broke out TL (A) -> DZ (B) is valid demand
2) SZ (C) broke out DZ (B) -> SZ (C) is valid supply
3) Our DZ (D) broke out SZ (C) -> DZ (D) is valid.
DZ (D) was not only valid but also tradable = 2:1 and consolidated away with 1 full candle. It had good departure, good base, no opposing supply. I can't understand. I was absolutely sure that it had to be a winning trade.
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  • #5,973
  • Sep 2, 2015 3:16pm Sep 2, 2015 3:16pm
Quoting John.
{quote} Hi Daniel, thanks for your comment. But it was tradable demand 100%. 1) DZ (B) broke out TL (A) -> DZ (B) is valid demand 2) SZ (C) broke out DZ (B) -> SZ (C) is valid supply 3) Our DZ (D) broke out SZ (C) -> DZ (D) is valid. DZ (D) was not only valid but also tradable = 2:1 and consolidated away with 1 full candle. It had good departure, good base, no opposing supply. I can't understand. I was absolutely sure that it had to be a winning trade. {image}
​

You are right. Perhaps the problem is that on the daily a supply zone is reached, so we are very high in the curve.
  • #5,974
  • Sep 2, 2015 3:24pm Sep 2, 2015 3:24pm
Quoting dvarrin
{quote}​ You are right. Perhaps the problem is that on the daily a supply zone is reached, so we are very high in the curve.
On the Daily we are bouncing from Daily Demand... so we are low in the curve. And on the weekly we are also low in the curve...
  • #5,975
  • Sep 2, 2015 4:44pm Sep 2, 2015 4:44pm
Quoting John.
{quote} Hi Daniel, thanks for your comment. But it was tradable demand 100%. 1) DZ (B) broke out TL (A) -> DZ (B) is valid demand 2) SZ (C) broke out DZ (B) -> SZ (C) is valid supply 3) Our DZ (D) broke out SZ (C) -> DZ (D) is valid. DZ (D) was not only valid but also tradable = 2:1 and consolidated away with 1 full candle. It had good departure, good base, no opposing supply. I can't understand. I was absolutely sure that it had to be a winning trade. {image}
I am in no way Alfonso and I hope he puts his thoughts on this chart as I am interested to know as well. I think you might have been looking at the chart on a lower time frame basis. Take this with a grain of salt as I am learning this as well. I could very well be wrong. Marks are on the chart.
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  • #5,976
  • Edited 10:58pm Sep 2, 2015 8:40pm | Edited 10:58pm
Quoting John.
{quote} On the Daily we are bouncing from Daily Demand... so we are low in the curve. And on the weekly we are also low in the curve...
USDNOK has a similar situation. As Oil suddenly turned to north yesterday, all NOK paris favoured the Krone a bit.

What's more, 3 days ago was the end of the month and some profit (loss) taking action painted some outlier end-of-month bars and generally these are the ones which are tagged 'not worked this time' when back testing

What's last but not least, we also have NFP this week, expect the most unexpected

By the way I have exactly the same EURNOK position, don't feel lonely, but I'm not stopped out yet, because whenever the price is near to a daily trend line like this, I know there is a huge probability of price (people) having an indecision thus riding the trend line like a teetertotter switching the sides. So considering this technical reason and fundamentals above, I've decided to give my position more wiggle room and put my stop one H4 DZ below and adjusted my lot size (risk) according to it at first place This looks to be breaking the rules but not exactly, this only makes my trade as if I trade not H4 but a daily zone (indeed we have a nice one on EURNOK) but had missed the last entry but now I have opportunity to enter it as price retraced again to original entry level and as price has not reached the take profit yet, it is still a valid daily trade as if it had been taken a day or two ago. In short, it's as if I've found an H4 opportunity to enter a once missed daily trade. Sometimes this 'patience' and 'risk reduction' strategy works, I'll wait and see. Longer term trends are still with us for sure.

This is a probability game, isn't it

Edit: Do I analyse things like this every single time? Of course not, time is valuable and overanalysing confuses most of the time. I generally accept the loss, forget about it and move to the next one. Sometimes I even find myself on the same bus (after confirmation, new zone etc.) without even noticing that I had a loss on the very same trading area two days ago You should leave 'I did everything right, it should work' attitude when trading, markets are always chaotic (but not random) in nature. Even 'right' means 'quite probably' in trading. This have been always a probability game, is now and will be.
Trade what you see..
  • #5,977
  • Sep 2, 2015 10:26pm Sep 2, 2015 10:26pm
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  • #5,978
  • Sep 2, 2015 11:42pm Sep 2, 2015 11:42pm
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  • #5,979
  • Sep 2, 2015 11:48pm Sep 2, 2015 11:48pm
D'u need something to watch beside price? Here is some BBC for ye
Joking aside, episodes are about trading psychology.

Inserted Video


Inserted Video


Inserted Video
Trade what you see..
  • #5,980
  • Sep 2, 2015 11:49pm Sep 2, 2015 11:49pm
Quoting John.
One more LOSS I'm losing belief... EURNOK H4 WK/D1/H4 are up WK/D1/H4 demand in control H4 removed opposing supply {image} {image} {image}
Quoting Stockguy
{quote} I am in no way Alfonso and I hope he puts his thoughts on this chart as I am interested to know as well. I think you might have been looking at the chart on a lower time frame basis. Take this with a grain of salt as I am learning this as well. I could very well be wrong. Marks are on the chart. {image}
Hello John,

Sorry for your loss. That will happen not once but MANY MANY times. I have also many losses, that's part of the game my friend. It takes a long time to understand the rules, minimum 1-2 years, you just can't lose faith, if I had done that I wouldn't be here now. Losses are lessons we need to learn, a loss = lesson.

Regarding your EUR/NOK H4 demand loss, these are my comments, hope they help.

H4 supply overshot but no close, H4 Demand is lower odds.
See how there is more price action to the left of that potential H4 demand you drew, if you take this kind of trades, make sure your stop loss is below that zone.

Cheers,
Alfonso
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