Supply and demand in a nutshell by Alfonso Moreno | Page 370 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #7,381
  • Mar 23, 2016 1:55pm Mar 23, 2016 1:55pm
Hy Guys!

GBP/USD

On MM we are int downtrend. In D1 we have uptrend. In H4 we are in downtrend, BUT we are at a BIG 3 TF demand zone.

Are we allowed to go Long?

Regards
Andras B.
  • #7,382
  • Mar 23, 2016 3:30pm Mar 23, 2016 3:30pm
Quoting projectaha
Hy Guys! GBP/USD On MM we are int downtrend. In D1 we have uptrend. In H4 we are in downtrend, BUT we are at a BIG 3 TF demand zone. Are we allowed to go Long? Regards Andras B.
Hello Andras,

Please post charts, you are forcing other traders to look at the charts for you and tell you what you want to hear. Please every time you ask a question about a trade, attach charts with zones and explanations on top.

Thanks a lot.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #7,383
  • Mar 23, 2016 7:42pm Mar 23, 2016 7:42pm
Quoting n_aftab
hi, I can see why you took them .. my question is isnt monthly and weekly and daily supply still in control until atleast some of that demand where you took the trade removes some supply? the daily trendline down is still intact .. so i was wondering could you expand a little on your thoughts ?
hello aftab, sure i can elaborate.

You are correct that the trend on the weekly and daily are down but the trend on the monthly is up and price is inside monthly demand.
So let us start with that premise - selling now, in the area where price is, is low probability - agreed?

Now, if we are not going to sell, we have only 2 other possible actions we can take -

1. wait and do nothing, waiting for the supply on the daily chart to be removed/demand to be created with a trend line break and then buying a pull back to demand. This is called a confirmation trade
I would ordinarily take this option myself under certain circumstances in my trade plan

2. look for FRESH demand zones with high quality (using odds enhancers to score) inside the monthly zone for a set and forget trade.
This trade has low risk, high probability and high profit potential if such a zone is present.
I found those zones with option 2 in mind.
I always look for option 2 first before and only use option 1 if there are no credible quality zones to set and forget at.

In addition, this trade again also uses the "rules of re-alignment" - Starting from the top
Monthly trend UP
Weekly trend Down

With these 2 pieces of information we don't even need to go to the daily chart for us to know what to do. The information immediately tells us that for us to be buyers, price must reach monthly demand.

Why? because the weekly chart is out of alignment. The weekly downtrend can only be stopped by a monthly demand zone (remember Newton's first law),

As SAD traders, we are taught to "ANTICIPATE" the new trend compared to the traditional trend trader who is taught to "FOLLOW" the old trend.

Please see picture below

I hope that helps

Best wishes

Attached Image (click to enlarge)
Click to Enlarge Name: usdcad analysis.PNG Size: 81 KB
Be careful what you think because your thoughts run your life..Solomon
  • #7,384
  • Mar 23, 2016 11:12pm Mar 23, 2016 11:12pm
GBPUSD
For Short sell
1) I will wait for price to close decisively below monthly swing low on daily chart & then only take possible daily & weekly short set up
2) Wait till price to retrace to monthly supply zone ( High in monthly curve)

Weekly sell set up at 1.45 not valid as it is located just in front of monthly swing low & price is bouncing from it.

For long set up
1)On daily chart Wait for close above weekly supply zone, then take long set up on daily chart, with monthly supply zone as target

Hence no trade at the moment.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 176 KB
  • #7,385
  • Mar 24, 2016 1:32am Mar 24, 2016 1:32am
Hello everyone
The GBPUSD - A good example of what to do when there is no Curve
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd curve discussion.PNG Size: 86 KB
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd w.PNG Size: 72 KB
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd d.PNG Size: 87 KB
Be careful what you think because your thoughts run your life..Solomon
  • #7,386
  • Mar 24, 2016 3:03am Mar 24, 2016 3:03am
Thank you Vsm and Akt for your time!

My oppinion was, that at munltiple demand level, we have a opporonity to go Long.
But I see now, that is not so simple! I need to practice more the rules!

Sorry Alfonso, i had diffulculties to uplod the picture, from my workplace desk. Won't hapen anymore!

Thx!

Regards
Andras B.
  • #7,387
  • Mar 24, 2016 3:24am Mar 24, 2016 3:24am
Quoting Akt
{quote} hello aftab, sure i can elaborate. You are correct that the trend on the weekly and daily are down but the trend on the monthly is up and price is inside monthly demand. So let us start with that premise - selling now, in the area where price is, is low probability - agreed? Now, if we are not going to sell, we have only 2 other possible actions we can take - 1. wait and do nothing, waiting for the supply on the daily chart to be removed/demand to be created with a trend line break and then buying a pull back to demand. This is called a...

Thanks Akt .. that helps explain a lot..
  • #7,388
  • Mar 24, 2016 4:24am Mar 24, 2016 4:24am
New daily supply zone being formed on spot gold xauusd. Daily bearish trendline, price reacting to monthly and weekly supply zones with a bigger picture downtrend. On the attached Daily chart you can see a projection of a potential short scenario happening. Some nice longs happening in us cross pairs. Audusd reacting to monthly bearish engulfing pattern in a downtrend.

The screenshot attached was created by one of the members of www.set-and-forget.com community. Thanks a lot Kevin. It shows very clearly one potential scenario.
Cheers,
Alfonso

Attached Image (click to enlarge)
Click to Enlarge Name: gold.png Size: 234 KB
Set and Forget supply and demand trading community
  • #7,389
  • Mar 24, 2016 4:36am Mar 24, 2016 4:36am
Quoting projectaha
Thank you Vsm and Akt for your time! My oppinion was, that at munltiple demand level, we have a opporonity to go Long. But I see now, that is not so simple! I need to practice more the rules! Sorry Alfonso, i had diffulculties to uplod the picture, from my workplace desk. Won't hapen anymore! Thx! Regards Andras B.
No problem Andras, that happens, don't worry. Remember you need to make a top down analysis of at least 3 timeframes in order to obtain the spot where you can buy or sell, or do nothing. Doing nothing is the most important trading decision you can take.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #7,390
  • Mar 24, 2016 6:25am Mar 24, 2016 6:25am
Hello everyone.

Some words of encouragement following conversations I have been having with some fellow traders here.

I have also been thinking through some of the posts and questions being asked on the thread.
It seems clear to me that most of us are aspiring traders (maybe not the big boss Alfonso though)

I am going to say something very personal and very controversial about learning to trade.

Most of us start with very small accounts and there is absolutely nothing wrong with that. It is actually the sensible thing to do when you are just starting out.

One of the issues that brings up though, is a psychological one, which for discussion sake, I will term "account envy".

We are many times trained by seasoned traders who have much larger accounts and we see their results and immediately want to emulate them, losing sight of the fact that it has probably taken several years for them to attain that level of expertise and account size.

I just ran a report of one of my personal accounts as I do from time to time, especially as the first quarter is coming to a close. This time though, I ran it from when I first opened the account in 2014.

I was amazed at my stupidity back then, looking at the sizes I was trading compared to my account size at the time. Total madness!!.

I then looked to the time when I started to be a more disciplined trader and had more understanding of my methodology. Very different sizes and outcomes.

The difference between these 2 periods looking back was that I made a decision some time ago that I was going to "get this" no matter what and so opened a small live account and tested my method till i gained the confidence i needed.

If i had opened a demo account (which i have done a number of times before) it would not have the same feel, nothing would be at stake.

I needed to get confident, I needed to give this opportunity a go, no excuses. I was tired of losing money and not understanding what I was really doing.

I wanted it bad..still do.

So, if i may suggest to the aspiring traders in here-

Be obsessed with making a go of trading. No excuses.
Life will get in the way, if you let it.
You have to want it bad enough.

Your family may not believe in your vision, your friends may laugh at you and call you "gambler".

What matters most is YOU,
YOU can't give up
YOU can't give in
YOU have come too far.
(sound like I am preaching but it is encouragement like this that got me through many a week of sadness, despondency and fear)

I am not there yet but I sure ain't where i used to be in the dark old days.

C'mon, get focused, get disciplined, get determined, get pissed off (excuse me please)

Make this an obsession - I know that is supposed to be a bad word but as I once heard a man say (I forget his name) - if you are going to be the best at something, not number 2 or number 3, the best, then you are going to have to become obsessed.
It was not until i heard that that I realized that that is the level I have been at the last 5-6yrs learning this methodology, the level of obsession.

Put a little money at stake, not enough to ruin you but enough to make and keep you interested.

I may not be as wealthy as I would like YET but i sure won't stop, there is too much at stake.

I hope this does not come across as condescending or arrogant, that is not my intention.

The report I ran this morning on my sick bed just made me think about the last several years and my journey thus far in trading.

So, that's my Easter message delivered then

Best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #7,391
  • Mar 24, 2016 9:23am Mar 24, 2016 9:23am
Quoting Akt
Hello everyone, EUR/USD - my thoughts. Best wishes {image} {image} {image}
AKT, In response to your EUR/USD post, I have a different read on the chart and wanted to share. I'm looking at the monthly chart and seeing that price is in the RBR from the past that I have highlighted in the yellow band. I also have the lower monthly demand area as you do, but since I'm seeing price in a current area I'm looking for confirmation on my Xray time frame (daily) for new areas to form and get long at!

On the weekly trend is up because of the piques. This is really a tough area because the supply has been visted so many time, but continues to hold. It was also broken with that SPIKE, oddly is now holding... Demand below from that monthly RBR is close. (Yellow is monthly areas, blue is weekly, red and green are daily areas.)

Daily now, trend line is broken so we are waiting to take daily demand areas in weekly, as we had previously discussed. also this is a 2nd touch of the daily supply in the monthly area.

If my monthly's are wrong then it shoots this whole model out the window Is my analysis correct?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: EURUSD M1 (03-24-2016 1009).png Size: 75 KB
Click to Enlarge Name: EURUSD W1 (03-24-2016 1015).png Size: 77 KB
Click to Enlarge Name: EURUSD D1 (03-24-2016 1019).png Size: 71 KB
  • #7,392
  • Mar 24, 2016 9:31am Mar 24, 2016 9:31am
Alfonso, thank you for this blog you have put together and also your support with this as well as your email analysis and other social channels... Now that I have had time to study your method and watch videos and read and test, it's coming along. Although much more hard work ahead Its my goal to grow my account so I can come join the private community and acquire more knowledge inside Many many thanks and Happy Easter to you and your family!!!

Best, Mark
  • #7,393
  • Mar 24, 2016 9:44am Mar 24, 2016 9:44am
Quoting mrodrigues
{quote} AKT, In response to your EUR/USD post, I have a different read on the chart and wanted to share. I'm looking at the monthly chart and seeing that price is in the RBR from the past that I have highlighted in the yellow band. I also have the lower monthly demand area as you do, but since I'm seeing price in a current area I'm looking for confirmation on my Xray time frame (daily) for new areas to form and get long at! On the weekly trend is up because of the piques. This is really a tough area because the supply has been visted so many...

Hello mrodrigues,

lets discuss the monthly chart. please see attached picture
Of course i am not saying my analysis is right, i am merely pointing out what i see.
Let me know what you think

best wishes
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd monthly.PNG Size: 98 KB
Be careful what you think because your thoughts run your life..Solomon
  • #7,394
  • Mar 24, 2016 10:18am Mar 24, 2016 10:18am
Quoting mrodrigues
{quote} AKT, In response to your EUR/USD post, I have a different read on the chart and wanted to share. I'm looking at the monthly chart and seeing that price is in the RBR from the past that I have highlighted in the yellow band. I also have the lower monthly demand area as you do, but since I'm seeing price in a current area I'm looking for confirmation on my Xray time frame (daily) for new areas to form and get long at! On the weekly trend is up because of the piques. This is really a tough area because the supply has been visted so many...
Your MN DZ is not a fresh level. So we cannot use it for Curve
  • #7,395
  • Mar 24, 2016 10:36am Mar 24, 2016 10:36am
Quoting Akt
{quote} Hello mrodrigues, lets discuss the monthly chart. please see attached picture Of course i am not saying my analysis is right, i am merely pointing out what i see. Let me know what you think best wishes {image}

Hi Akt. Alfonso wrote:"What is a supply or demand in control? It's the previous fresh or non fresh supply and demand zones which has not yet been broken (taken out). If a supply zone has been hit 10 times and the distal line (furthest away price from current price) of that zone has not yet been broken, that zone is still valid, that zone is still the supply in control."

That is mrodrigues' MN DZ is stiil in control, isn't it? And we can use it for Curve analysis
  • #7,396
  • Mar 24, 2016 10:37am Mar 24, 2016 10:37am
Quoting Akt
{quote} Hello mrodrigues, lets discuss the monthly chart. please see attached picture Of course i am not saying my analysis is right, i am merely pointing out what i see. Let me know what you think best wishes {image}
AKT, No worries!! This is fantastic stuff to be comparing notes. This is how we also learn. Other view points are extremely beneficial. that's what helps make the community. I didn't think about areas needing to be fresh to apply to curve analysis.. One point I missed!!! Also to your point conom589!!! I did recognize the 1st test which you pointed out, which tells me my eyes are getting trained... One point I'm picking up on is that even though this area has been tested, since it's a monthly time frame that's the strongest type of time frame that we should really be aware if it and not short into it, until price proves to us that, by removing it. I've come to noticed that tested weekly and monthly areas tend to hold on 2nd and 3d tests. Now dailys I want fresh and original areas. Ultimately I'd like to see that above supply area taken out with strong ERC candles and then have price return, to prove to me that buyers are present in that area.

Best Mark
  • #7,397
  • Mar 24, 2016 10:47am Mar 24, 2016 10:47am
Quoting conom589
{quote} Hi Akt. Alfonso wrote:"What is a supply or demand in control? It's the previous fresh or non fresh supply and demand zones which has not yet been broken (taken out). If a supply zone has been hit 10 times and the distal line (furthest away price from current price) of that zone has not yet been broken, that zone is still valid, that zone is still the supply in control." That is mrodrigues' MN DZ is stiil in control, isn't it? And we can use it for Curve analysis
Absolutely correct Conom!
Alfonso's post is very accurate.

The DZ price is currently in on the Euro may not be fresh and so can't be used to measure the curve BUT it is still a demand zone that has not been taken out.

Think of it like a boxer who has been knocked down 3 times (3 retests). He got up after the first one and was relatively still fresh and fought on.
Then he got knocked down a second time (2nd retest). His opponent thinks, "i am sure i have got him now" but then our fighter gets back up again, this time a bit more slowly than the first time and of course not as strong.
By the 3rd knockdown, our fighter stays down till the count of 7 or 8 BUT still gets up again.
He may be hurt bad but he is not yet defeated (the zone may be weak but it is not yet broken!!!)

I hope that helps

best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #7,398
  • Mar 24, 2016 10:58am Mar 24, 2016 10:58am
Quoting mrodrigues
{quote} AKT, No worries!! This is fantastic stuff to be comparing notes. This is how we also learn. Other view points are extremely beneficial. that's what helps make the community. I didn't think about areas needing to be fresh to apply to curve analysis.. One point I missed!!! Also to your point conom589!!! I did recognize the 1st test which you pointed out, which tells me my eyes are getting trained... One point I'm picking up on is that even though this area has been tested, since it's a monthly time frame that's the strongest type of time frame...
I couldn't agree more mrodrigues.
A daily zone can hold price for a good while as well u know.
it all depends on the order flow around that price level but you are correct, because monthly and weekly zones represent the picture of bigger stacks of orders they are stronger than daily charts by definition

Best wishes

Attached Image (click to enlarge)
Click to Enlarge Name: euro multiple touches 2.PNG Size: 39 KB
Be careful what you think because your thoughts run your life..Solomon
  • #7,399
  • Mar 24, 2016 11:02am Mar 24, 2016 11:02am
Quoting Akt
{quote} Absolutely correct Conom! Alfonso's post is very accurate. The DZ price is currently in on the Euro may not be fresh and so can't be used to measure the curve BUT it is still a demand zone that has not been taken out. Think of it like a boxer who has been knocked down 3 times (3 retests). He got up after the first one and was relatively still fresh and fought on. Then he got knocked down a second time (2nd retest). His opponent thinks, "i am sure i have got him now" but then our fighter gets back up again, this time a bit more slowly than...
Do you want to say that this DZ is stiil just demand zone in control, but isn't Valid demand? We cannot buy in this situation, even if we have demand in control (but not valid - no 2:1 profit)).
  • #7,400
  • Mar 24, 2016 11:17am Mar 24, 2016 11:17am
Quoting conom589
{quote} Do you want to say that this DZ is stiil just demand zone in control, but isn't Valid demand? We cannot buy in this situation, even if we have demand in control (but not valid - no 2:1 profit)).
No, conom.
It is valid demand.
As you can see, price has been held up for months by this zone.
There can be only one reason why price hasn't gone through it - demand has been enough to meet the supply and even surpass it just enough to hold the sellers at bay

The reason I am not buying at this demand zone is because of a lack of profit potential.
The supply zone created with the trend line break is too close.
If i don't have a profit margin, i don't have a trade

best wishes
Be careful what you think because your thoughts run your life..Solomon
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