Supply and demand in a nutshell by Alfonso Moreno | Page 302 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #6,021
  • Sep 4, 2015 8:40am Sep 4, 2015 8:40am
Quoting panoramia
{quote} Scepticism makes you no good in life overall, believe me What is the problem now? May I know? Cheers, Alfonso
Hehe, this time it was just a joke Thanks for considering though
Trade what you see..
  • #6,022
  • Edited 9:32am Sep 4, 2015 9:18am | Edited 9:32am
Quoting panoramia
{quote} Hi John, That monthly demand you drew is NOT demand. Why? A monthly demand zone needs to take out an opposing monthly supply zone or break a monthly descending trendline in order to be considered demand. If you take a look at your monthly chart, neither happened! You were not following the core rules, it's a common mistake to consider a strong rally in price a demand zone. Hope that it sense when you look at the monthly demand with these 2 core rules in mind. Cheers, Alfonso
Thank you, Alfonso! It's very important. That was the reason why I asked you to show some of your trades - it helps to understand our mistakes and misunderstanding of the rules.

Now it's clear for me why you took this trade. MN demand is below. WK demand is used-up 6 or 7 times. Daily demand was fresh but it was nested in WK DZ so if HTF zone is not good all lower nested zones are the same.

But I want to ask 2 questions if you do not mind.
1) When can we be more aggressive against opposing zone?
- if it's not fresh?
- if it's used-up?
- if it's tested 3-4-5... times?

2) We have an addition to the rules that if a zone has more than 3:1 to opposing zone so it can be considered as a zone. That MN demand had more than 3:1 to opposing supply that was the reason I decided it's demand.
But you say we should not pay attention to such zones which did not break out any opposing zone or TL. So I can conclude only that if a zone has more than 3:1 to opposing zone but did not remove any opposing zone or TL - we can use such zone only:

  1. to validate other zone which will remove this zone somewhere in future.
  2. to define a trend (if such zone is broken) - OR NOT???
  3. But such zone can not be in control
  4. But such zone can not be considered as a HTF zone for nested zones.

Are my statements right?
I hope you understand what I would like to say...? Difficult to explain

  • #6,023
  • Sep 4, 2015 9:52am Sep 4, 2015 9:52am
Here is my go at it Alfonso as to why you took that trade. All marks are on the charts.

Thanks
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  • #6,024
  • Sep 4, 2015 10:39am Sep 4, 2015 10:39am
Quoting Stockguy
Here is my go at it Alfonso as to why you took that trade. All marks are on the charts. Thanks {image} {image} {image} {image} {image}
+1 to your analysis and I had made a very similar one. The only reason why I didn't get the trade (in fact closed it immediately because of fear) was my dashed trend line on H4 but Alfonso kindly cleared this also few messages ago.
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Trade what you see..
  • #6,025
  • Edited 12:41pm Sep 4, 2015 11:38am | Edited 12:41pm
Hi Alfonso,

I'm trying to analyse your AUDCAD H4 trade. On the daily, price broke below demand zone in control, so the trend is down. But how do we analyse the H4 chart? Before the pullback to the H4 supply zone, the price has reached the next daily demand zone. I don't understand where I'm making a mistake, because for me it means that we are low in the daily curve, and I would not trade a H4 supply zone in this case. What am I doing wrong in my analysis?

Is it that I have to use the weekly for the SD curve and the daily for the direction? So as on the daily demand zones are broken, so the trend is down and we have enough room to go short because demand zone in control on the weekly is much lower?

Is it possible to trade use only two timeframes with the period of the higher one being 4 times the lower one? For example Daily and H4, weekly and daily? I've seen you're often usind the monthly and the daily.

Cheers,
Daniel
  • #6,026
  • Sep 4, 2015 12:06pm Sep 4, 2015 12:06pm
Quoting John.
And the last one from me for today. EURSEK H4 momentum short WK/D/H4 are down No opposing zone in control H4 is good quality supply, good base, good departure, removed opposing DZ and has free room to opposing demand. A couple of questions: 1) I'm afraid that price will not reach the zone but bounce from last week lows... 2) I'm afraid that H4 TL will be broken before we enter the trade and we will have to cancel it? {image} {image} {image} Updated: D TL is not drawn correctly (the last one is not a peak) but trend is down because 2 DZ had been...
Hi my friend i'm qouting you because you have shared this chart.
Is funny think that the charts are speaking to you so let me do this,
Let me do a challenge with you:
could you please tell me what is telling you this chart for the moment? (then i will tell you what it is telling me ok?)


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  • #6,027
  • Sep 4, 2015 1:19pm Sep 4, 2015 1:19pm
Quoting alegargano
{quote} Hi my friend i'm qouting you because you have shared this chart. Is funny think that the charts are speaking to you so let me do this, Let me do a challenge with you: could you please tell me what is telling you this chart for the moment? (then i will tell you what it is telling me ok?) {image}
Hi, alegargano! Glad to hear from you! I see what you want to tell. MN is up and price is reacting from WK flip zone and also from WK EMA20. No shorts?
But I'm not sure that MN is still up. One valid DZ was broken so it's conso like we it or not. Please see the chart.
But WK flip zone and EMA20 are not good for shorts...
And I took a nice short a couple of weeks ago
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  • #6,028
  • Sep 4, 2015 1:52pm Sep 4, 2015 1:52pm
Quoting Chawl
{quote} +1 to your analysis and I had made a very similar one. The only reason why I didn't get the trade (in fact closed it immediately because of fear) was my dashed trend line on H4 but Alfonso kindly cleared this also few messages ago.
Thats Fantastic! I am honored to have a similar outlook as you. I am going to have to go back and look at your H4 chart again. I must have missed this.
  • #6,029
  • Sep 4, 2015 2:19pm Sep 4, 2015 2:19pm
Quoting Stockguy
{quote} Thats Fantastic! I am honored to have a similar outlook as you. I am going to have to go back and look at your H4 chart again. I must have missed this.
Honour is mine, I'm flattered, thank you But I'm just a fellow of this method like you and we must indeed thank to Alfonso for all his efforts
Trade what you see..
  • #6,030
  • Sep 4, 2015 2:28pm Sep 4, 2015 2:28pm
Quoting Chawl
{quote} Honour is mine, I'm flattered, thank you But I'm just a fellow of this method like you and we must indeed thank to Alfonso for all his efforts
Indeed thanks to Alfonso. I am just glad to be in the neighborhood of doing things right.
  • #6,031
  • Edited 4:10am Sep 5, 2015 3:25am | Edited 4:10am
Quoting John.
{quote} Hi, alegargano! Glad to hear from you! I see what you want to tell. MN is up and price is reacting from WK flip zone and also from WK EMA20. No shorts? But I'm not sure that MN is still up. One valid DZ was broken so it's conso like we it or not. Please see the chart. But WK flip zone and EMA20 are not good for shorts... And I took a nice short a couple of weeks ago {image} {image}
ehm... john that is not demand, look the picture below

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You want to be a swing trader, i'm a position trader because we have 2 different timeframe to entry.
If you want to be a swing trader you have to know where you have to exit and then wait for a brand new entry.
The h4 is a great entry TF and your entry is great but you cannot use your entry for a position type of investment. You have to prepare your emotion at much faster movement. more than 2 retest of your entry and you have to prepare yourself to be focus on every single particula that could give you an opportunity to win or to loose.

Now let me tell you what the chart is telling me:
Yesterday i post my view on the private community and i've specified one important thing: The wk chart have to close underneath the yellow line. Otherwise going short near that line could be only defined by the words crazy.
We are into a MN flipzone and on the wk that is not a simple line as you can see from my chart above is really a Wall, big big wall. So let's start.

The MN chart is telling me.
Hey i'm in an uptrend, i've just removed another zone of supply and created a brand new MN demand that is tested for 2 times.
The MN demand is telling me I'M IN CONTROL and you are too low in the MN curve but be aware of a wall that i have in front of me.

The wk chart is telling me.
I have only one zone valid the supply zone and a wall in front of me that was resistance and now is support so wait for a break (close below) if you want to go short.
I'm showing you also that for the last 5 weeks i've created a balance in price, so you don't want to trade balance, you want to trade imbalances right?
If you want to add an issue of the technical analisys the price is creating a triangle

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after this talk at least you could trade from the extreme to the wall, don't add any trade near that level, because the price could do everything, then if you are a bettor, well, this is not part of the strategy and if you loose the faith is only in you.
  • #6,032
  • Sep 5, 2015 4:27am Sep 5, 2015 4:27am
i want to suggest to all of you these two videos of Alfonso, watch it severl time, try to understand really what he says.

Inserted Video



Inserted Video



You can loose the faith in god beacuse you never saw it, but if you learn and know pattern to entry, the PA became something real, how could you lose faith?
Like Alfonso said in the second video, this is not only about this strategy, he said that all the strategy works are the thoughts in our brain that do not works
Please watch this 2 videos.
  • #6,033
  • Sep 5, 2015 3:04pm Sep 5, 2015 3:04pm
Alfonso, I would kindly ask you to answer a question about inheritance.
Attached Image
  • #6,034
  • Sep 5, 2015 3:32pm Sep 5, 2015 3:32pm
Quoting alegargano
i want to suggest to all of you these two videos of Alfonso, watch it severl time, try to understand really what he says. https://www.youtube.com/watch?v=4nabFKPb40I https://www.youtube.com/watch?v=IAgO1WH0EHw You can loose the faith in god beacuse you never saw it, but if you learn and know pattern to entry, the PA became something real, how could you lose faith? Like Alfonso said in the second video, this is not only about this strategy, he said that all the strategy works are the thoughts in our brain that do not works Please...
In the first video, at 7:10 minutes, I also don't understand why that red candle is a supply zone. I know price broke demand, but why the supply is at that level?
And about the demand zone on the right, I don't fully understand why it is there. There are many other candles which could be taken as a base. I'm a bit lost.
  • #6,035
  • Sep 5, 2015 7:58pm Sep 5, 2015 7:58pm
from what i understand the demand zone to the right was a valid demand because it broke above an important resistance/flip zone that price had been respecting for some time ( had 3 retests )
Quoting dvarrin
{quote} In the first video, at 7:10 minutes, I also don't understand why that red candle is a supply zone. I know price broke demand, but why the supply is at that level? And about the demand zone on the right, I don't fully understand why it is there. There are many other candles which could be taken as a base. I'm a bit lost.
  • #6,036
  • Sep 5, 2015 9:31pm Sep 5, 2015 9:31pm
Quoting John.
Alfonso, I would kindly ask you to answer a question about inheritance.
Hey John. I hope you don't mind me answering this. I am sure Alfonso will correct me if I am wrong. Based on what I understand all of your green zones become demand zones when the opposing origin of the move down gets removed. I will admit that I don't totally understand the point to inheriting a property. But thats what I understand as of now.

Stockguy
  • #6,037
  • Edited 4:23am Sep 6, 2015 2:44am | Edited 4:23am
Quoting Stockguy
{quote} Hey John. I hope you don't mind me answering this. I am sure Alfonso will correct me if I am wrong. Based on what I understand all of your green zones become demand zones when the opposing origin of the move down gets removed. I will admit that I don't totally understand the point to inheriting a property. But thats what I understand as of now. Stockguy
Say a group of people (buyers) decided to buy a car model and we now have demand in the market. Few buyers will get the lowest price (origin of the move) from few most contended sellers but as the sellers are consumed in this (previous supply, but now demand) level, price will move higher to the next (supply) level of less contended sellers leaving some meanest buyers behind with no car. If there are still enough buyers in the new more expensive level, less contended sellers will also be consumed and price will continue to climb higher to a new level of even less contended sellers leaving some less mean buyers behind with no car and so on. So as long as new buyers keep coming, price will be in an 'uptrend' because of above mechanism and not only previous supply levels will turn to demand levels but also new levels of demand will be created (original?) as buyers outnumber sellers. Sometimes we don't have new buyers temporarily (or buyers want to get profit so become sellers etc.) and a discount is needed to attract some and sellers begin to sell cheaper till price hit a lower zone of demand where we've had left some buyers with no car and possibly new buyers (may be we?) joining the trend, even sometimes new buyers will come before an old zone is hit and a new demand zone (original) is formed. This cause a rally in price forming CP and DBR levels where groups of sellers were consumed and left some buyers with no car and left some new potential buyers waiting to join the trend at a price they would accept. So 'as the uptrend continues' (we are over the trend line?) a trader should always be a buyer of the asset and every retrace in price will be a buying opportunity till the up trend ends (trend line is broken?).

There is no magic inherited to the lower zones but it's a practical way to think when analysing the above market mechanism. In short we are always a potential buyer on 'all' demand levels even at the origin of the move ***as long as the up trend is intact*** (how can I emphasize more ) If level is fresh, you set and forget, if not, you wait for confirmation, if in doubt, then no trade

Edit: So, one can understand why counter trend trading is quite dangerous if you don't really know what you are doing.
Trade what you see..
  • #6,038
  • Sep 6, 2015 4:22am Sep 6, 2015 4:22am
Hi Alfonso,

I've a question about the analysis of some price action.
This is the monthly chart of EURUSD and I would like to understand in which direction we should trade on the daily or weekly, when price has reached the demand zone at the green arrow.

Two demand zones have been taken out during the down move, so we know that the trend is down.
The purple suply zone is a weekly supply. When it is retested, there is no candle fully outside the weekly down trendline, so we can trade it.

But what should we wait for to trade on the weekly next?

The demand zone on the monthly has been crossed. In the first post, you've written that a zone is considered to be brken even if it is by a single pip. But recently you tend to wait for a close on the other side of the zone, is that right?

As price stays above the demand zone, can we trade long on the weekly?

On the monthly, demand zones are being violated, so we have a down trend. We cannot draw a descending trendline though, as we don't have two picks. But price has reached opposing demand and holding above it. Is this consolidation?

Cheers,
Daniel
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  • #6,039
  • Edited 2:20am Sep 7, 2015 2:09am | Edited 2:20am
Quoting John.
Alfonso, I would kindly ask you to answer a question about inheritance. {image}
Quoting Stockguy
{quote} Hey John. I hope you don't mind me answering this. I am sure Alfonso will correct me if I am wrong. Based on what I understand all of your green zones become demand zones when the opposing origin of the move down gets removed. I will admit that I don't totally understand the point to inheriting a property. But thats what I understand as of now. Stockguy
The lower zone is demand as well, it inherits the demand property from the top demand zones, it will most likely be nested within a bigger timeframe zone. If that is the case and that bigger timeframe zone is trending up, it's a high odds scenario, else it would be a low odds one.

Makes sense John?
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,040
  • Sep 7, 2015 2:18am Sep 7, 2015 2:18am
Quoting dvarrin
{quote} In the first video, at 7:10 minutes, I also don't understand why that red candle is a supply zone. I know price broke demand, but why the supply is at that level? And about the demand zone on the right, I don't fully understand why it is there. There are many other candles which could be taken as a base. I'm a bit lost.
I wish I could help but I just can't go and look for the video and locate that minute and take a screenshot of it as well as trying to see what you are seeing. Please, every time you ask a question about something, DO upload a screenshot with the questions on top of it, else we won't be able to help.

Cheers,
Alfonso
Set and Forget supply and demand trading community
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