Supply and demand in a nutshell by Alfonso Moreno

Quoting Chawl

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{quote} 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...

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Quoting dvarrin

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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...

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Quoting panoramia

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{quote} Thanks for sharing with us that analogy, I liked it, it makes a lot of sense. Trend trading is what makes most sense, but people won't see trades and they will switching to lower timeframes, look for counter-trend trades expecting to get some benefits. Why? Our minds are not comfortable with working for some hours and getting no benefit out of it, our ego will force us to chase trades and go counter-trend so that he can see some action. Not easy to control, it takes years. Thanks for sharing! Cheers, Alfonso

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Quoting Chawl

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Is this a marubozu demand and why, why not? IMHO it is because of flip and gap. Any comrades? Alfonso? {image}

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Quoting panoramia

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{quote} {quote} 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

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Quoting panoramia

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{quote} No, it's not. If you consider that a marubozu candle then you almost all ERC candles will be marubozu A marubozu is a candle with no wick or very small wicks and a tight base, tight base meaning small/medium base. That one is a huge base! Be careful with that! Cheers, Alfonso

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Quoting panoramia

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{quote}That opposing zone is a 3 months demand zone, probably also a 6 months demand zone. I looked up that date and that's exactly what there was. 6 months demand zone and 6 months in an uptrend nested 3M demand zone for set and forget longs This was a 3 months long at 6 months demand zone with 6 months still in an uptrend. This is the power of multiple timeframe top down analysis and supply and demand zones. Hope that it makes sense because it's very important, you will see monthly consolidation differently when you look at 3 and 6 months charts,...

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Quoting Stockguy

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{quote} Hey Alfonso. Thanks for all of your replies. They are greatly appreciated for sure. Can you answer the remarks I have on your chart? Thanks, Stockguy {image}

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Quoting dvarrin

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{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.

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Quoting panoramia

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{quote} Hi Daniel, What should we wait on the weekly trade? Expect a strong drop, not because that's what happened (now seen in hindsight) but because what you said on your analysis, Monthly was down. Strong zone at the retest of a monthly demand zone break, also known as higher timeframe flip zone. Waiting for a close above/below a zone, yes... I do that under certain scenarios, not always, mostly when I'm counter-trending or a zone has been hit a couple of times without having a candle close or the zone is located at an important flip zone, then...

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Quoting dvarrin

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{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.

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Quoting dvarrin

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{quote} Hi Alfonso, I've made a screenshot of the video where I don't understand why you have chosen the zones you've chosen. {image}

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Quoting Chawl

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{quote} They've caused the break of opposing zones.

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Quoting John.

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EURJPY Short H4. Momentum LOSS. WK/D1/H4 - down WK/D1 - Supply in control WK closed below WK DZ. {image} {image} {image}

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Quoting dvarrin

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{quote} Thank you Chawl and alegargano! I understand that they become a valid zone, because they've removed opposing SD zone, but why those specific candles? For example for the supply zone, I would take the small red candle right after the blue one, before the strong down move. Here is how I would have drawn the SD zones at the time of the dotted red vertical line (no new zone can be drawn given the price action after that vertical line, because no zone has been broken): The zones not extended up to the right of the charts are the zones that have...

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