Supply and demand in a nutshell by Alfonso Moreno | Page 312 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #6,221
  • Sep 23, 2015 1:02am Sep 23, 2015 1:02am
Thanks Alfonso for the indicator and template
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  • #6,222
  • Sep 23, 2015 4:44am Sep 23, 2015 4:44am
Quoting hesron
Thanks Alfonso for the indicator and template {image}
You are welcome my friend, happy to help and see that you are using it. Awesome! Enjoy!

Have a nice Wednesday!
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,223
  • Sep 23, 2015 4:45am Sep 23, 2015 4:45am
Quoting Stockguy
{quote} You are right that the weekly supply will likely take out that daily demand. If I would take a long it would only be up to that weekly level. This of course would be higher risk and high on the weekly curve. BUT, with that aside. Are you saying that this daily demand level is invalid on its own? Or is it invalid because of the weekly level? In other words put the weekly chart aside. By its self is the daily zone valid? I ask as I get a little lost on the supply/demand in control theory. Was the rest of my analysis correct? Thanks, Stockguy...
One thing is the validity of an imbalance by what it has accomplished and another thing is its tradability according to a top down analysis bigger picture trend and your own trading plan, makes sense?

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,224
  • Sep 23, 2015 9:10am Sep 23, 2015 9:10am
Quoting panoramia
{quote} One thing is the validity of an imbalance by what it has accomplished and another thing is its tradability according to a top down analysis bigger picture trend and your own trading plan, makes sense? Cheers, Alfonso
I think I understand. You are saying that while it is a demand zone. It would be suicide to take a long at that daily level given that its right under weekly supply.
  • #6,225
  • Sep 24, 2015 6:05am Sep 24, 2015 6:05am
Quoting panoramia
{quote} You must apply the realignment rules, watch the latest webinars to learn more about it. If one trendline is broken that means you can't trade in the direction of that trendline on that timeframe, you need to wait for a bigger timeframe to continue trading in the direction of the bigger picture trend. Every time there is a trendline break there is an imbalance, as per the rules. Apply all that and you may find out why you are missing trades. Cheers, Alfonso
Thank you Alfonso!

What I've really missed is that when a trendline is broken, we can enter at a zone nested in an higher timeframe zone, even if the trendline is broken. I thought an ascending trendline is invalidated when price reaches opposing HTF supply or a descending trendline is invalidated when price reached opposing HTF demand. But the ascending trendline, when broken, is also invalidated when we reach HTF demand for example. And that helps me to understand why I am missing always very profitable trades.

Alfonso, what can we do when there is consolidation on the higher timeframe?

For example if weekly was in a down trend and trend has been broken and a weekly demand zone which has broken the descending trendline is created.
Do we have to wait for price to pullback to that weekly demand zone, or can we take any demand zone on the daily? Can we trade the daily supply zones?

The sequence and realignment rules say that if the descending trendline is broken on the weekly, we have to wait for price to reach a monthly zone. So this means that we are not allowed to trade daily zones, is that right?

But if we are using the following timeframes for our analysis: W1, D1 and H4. What do we do on the daily when the weekly is consolidating? Can we trade in any direction, only if we are waiting for confirmation?

Cheers,
Daniel
  • #6,226
  • Sep 24, 2015 8:31am Sep 24, 2015 8:31am
Quoting dvarrin
{quote} Thank you Alfonso! What I've really missed is that when a trendline is broken, we can enter at a zone nested in an higher timeframe zone, even if the trendline is broken. I thought an ascending trendline is invalidated when price reaches opposing HTF supply or a descending trendline is invalidated when price reached opposing HTF demand. But the ascending trendline, when broken, is also invalidated when we reach HTF demand for example. And that helps me to understand why I am missing always very profitable trades. Alfonso, what can we do...
You were missing a very important rule Daniel. Glad that you now can see that.

Regarding consolidation, please upload a top down analysis of an instrument in consolidation, add zones and trendlines and we can go from there. You wrote too much text but no image An image is worth a thousand words

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,227
  • Edited 10:25am Sep 24, 2015 8:55am | Edited 10:25am
Quoting panoramia
{quote} You were missing a very important rule Daniel. Glad that you now can see that. Regarding consolidation, please upload a top down analysis of an instrument in consolidation, add zones and trendlines and we can go from there. You wrote too much text but no image An image is worth a thousand words Cheers, Alfonso
Hi Alfonso,

I don't have an example exactly describing what I was talking about.

Here on the Monthly chart of EURJPY, the ascending trendline is broken and now we have consolidation.
But I think buying at that demand zone is valid, because when it touches the demand zone, the trendline was not broken, yet.

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYMonthly.png Size: 60 KB


On the weekly, we can see that the descending trendline is broken and now price is consolidating. The demand zone at the origin of the trendline break has not been tested, yet.

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYWeekly.png Size: 53 KB


On the daily, we have a demand zone at the monthly demand proximal line. that demand zone is created by a break above the daily descending trendline.
Can we take that trade?

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYDaily.png Size: 59 KB


If on the monthly, the demand zone was tested after a candlestick completely below the ascending trendline, it would not be a place to open a long trade.
Price would then be consolidating on the monthly and on the weekly. In such a case, What can be do on the daily? Taking both longs and shorts, but always with confirmation?

Cheers,
Daniel
  • #6,228
  • Sep 24, 2015 1:36pm Sep 24, 2015 1:36pm
Quoting dvarrin
{quote} Hi Alfonso, I don't have an example exactly describing what I was talking about. Here on the Monthly chart of EURJPY, the ascending trendline is broken and now we have consolidation. But I think buying at that demand zone is valid, because when it touches the demand zone, the trendline was not broken, yet. {image} On the weekly, we can see that the descending trendline is broken and now price is consolidating. The demand zone at the origin of the trendline break has not been tested, yet. {image} On the daily, we have a demand zone at the...

I think the proximal line of your monthly demand zone is to high because you included the upper wicks into your zone.
The daily demand zone is not nested in the monthly demand if you don't include the wicks.

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYMonthly.png Size: 38 KB
  • #6,229
  • Sep 24, 2015 2:43pm Sep 24, 2015 2:43pm
I would do TL like this. Monthly tested, TL broken.
week is a "mess" for me.
Not sure what is on D1 depends of we make an other TL or not. possible there was a trade on Daily.
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  • #6,230
  • Sep 24, 2015 4:15pm Sep 24, 2015 4:15pm
Quoting Bernhard
I would do TL like this. Monthly tested, TL broken. week is a "mess" for me. Not sure what is on D1 depends of we make an other TL or not. possible there was a trade on Daily. {image} {image}
Bernhard, more than half of your trendlines are wrong. an ascending trendline must make a higher high after the second valley than the second leg after the first valley. And reverse for a down trend.

Cheers,
Daniel
  • #6,231
  • Sep 24, 2015 4:15pm Sep 24, 2015 4:15pm
Quoting dis01
{quote} I think the proximal line of your monthly demand zone is to high because you included the upper wicks into your zone. The daily demand zone is not nested in the monthly demand if you don't include the wicks. {image}
Hi dis01,

I think that if we want to be conservative, we can draw the levels like that.

Cheers,
Daniel
  • #6,232
  • Sep 24, 2015 6:28pm Sep 24, 2015 6:28pm
Quoting dvarrin
{quote} Bernhard, more than half of your trendlines are wrong. an ascending trendline must make a higher high after the second valley than the second leg after the first valley. And reverse for a down trend. Cheers, Daniel
can you draw it please. just use lighshot
http://app.prntscr.com/en/index.html
easy to copy pic and draw in
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  • #6,233
  • Sep 25, 2015 2:45am Sep 25, 2015 2:45am
Quoting Bernhard
{quote} can you draw it please. just use lighshot http://app.prntscr.com/en/index.html easy to copy pic and draw in
Here hare my trendline Bernhard

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYMonthly.png Size: 60 KB


Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYDaily.png Size: 74 KB


Cheers,
Daniel
  • #6,234
  • Sep 25, 2015 4:20am Sep 25, 2015 4:20am
Quoting dis01
{quote} I think the proximal line of your monthly demand zone is to high because you included the upper wicks into your zone. The daily demand zone is not nested in the monthly demand if you don't include the wicks. {image}
Yes, correct. Monthly demand imbalance was too wide because the upper wicks were included. Thanks for commenting on it.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,235
  • Sep 25, 2015 4:20am Sep 25, 2015 4:20am
Quoting dvarrin
{quote} Hi Alfonso, I don't have an example exactly describing what I was talking about. Here on the Monthly chart of EURJPY, the ascending trendline is broken and now we have consolidation. But I think buying at that demand zone is valid, because when it touches the demand zone, the trendline was not broken, yet. {image} On the weekly, we can see that the descending trendline is broken and now price is consolidating. The demand zone at the origin of the trendline break has not been tested, yet. {image} On the daily, we have a demand zone at the...
Longs possible but only on confirmation. The biggest timeframe combination is consolidating as you well said, so longs on confirmation.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,236
  • Sep 25, 2015 4:21am Sep 25, 2015 4:21am
Quoting Bernhard
I would do TL like this. Monthly tested, TL broken. week is a "mess" for me. Not sure what is on D1 depends of we make an other TL or not. possible there was a trade on Daily. {image} {image}
The way you drew the trendlines do not follow the rules where you connect the latest 2 valleys/peaks that make higher highs or lower lows than previous valley/peak's second leg low/high.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,237
  • Sep 25, 2015 4:23am Sep 25, 2015 4:23am
Quoting dvarrin
{quote} Bernhard, more than half of your trendlines are wrong. an ascending trendline must make a higher high after the second valley than the second leg after the first valley. And reverse for a down trend. Cheers, Daniel
Yep, I agree with you, I commented on those. He's not following the rules to connect latest 2 valleys/peaks. The whole analysis is wrong if it's not done correctly, any other rules he tries to apply to his analysis will therefore be wrong.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #6,238
  • Sep 25, 2015 4:25am Sep 25, 2015 4:25am
Quoting dvarrin
{quote} Here hare my trendline Bernhard {image} {image} Cheers, Daniel
Hey Daniel,

Take a look at my attachment and the green trendlines. Last green TL is the last valid one connecting the latest 2 valleys. There is another trendline in green that you missed.

Cheers,
Alfonso

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 106 KB
Set and Forget supply and demand trading community
  • #6,239
  • Edited 9:49am Sep 25, 2015 4:31am | Edited 9:49am
Quoting panoramia
{quote} Hey Daniel, Take a look at my attachment and the green trendlines. Last green TL is the last valid one connecting the latest 2 valleys. There is another trendline in green that you missed. Cheers, Alfonso {image}
Yes, I've forgotten them. Thank you Alfonso! And the last one is very important for the analysis of price action now ;-)

About my mistake of the size of the monthly demand zone, where I've included the wick, can we say that, if we follow the Sequence and Realignment rules, price should also reach a weekly demand zone. In this case, price is "perhaps" at monthly demand, but price has not reached a weekly demand zone, so it is probably not a good place to open a trade.

I've an other question about nested zone. If we trade the Sequence and Realignment rules and price returns to a demand zone at the proximal line of an higher timeframe demand zone, can we enter a trade at the retest of trading timeframe demand proximal line, or do we have to wait for price to touch the higher timeframe demand proximal line? The zones in the chart be low are wrong. It is only to illustrate the example.

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYH4.png Size: 59 KB



Cheers,
Daniel
  • #6,240
  • Sep 25, 2015 9:21am Sep 25, 2015 9:21am
Quoting panoramia
{quote} Yep, I agree with you, I commented on those. He's not following the rules to connect latest 2 valleys/peaks. The whole analysis is wrong if it's not done correctly, any other rules he tries to apply to his analysis will therefore be wrong. Cheers, Alfonso
Thank you Alfonso. I have reread about TL in post 1 and will look again the vids about it.
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