Supply and demand in a nutshell by Alfonso Moreno | Page 372 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #7,421
  • Mar 26, 2016 10:17am Mar 26, 2016 10:17am
Quoting panoramia
{quote} Why is the monthly trend on GBPCAD in bullish consolidation? We need a full OHCL closed for a trendline to be broken, it's the 26th of March, 5 days left, so it can't be. If you were to trade the monthly demand zone alone, that would have been a valid long. Hope it makes sense. Cheers, Alfonso
Thanks Alfonso I got the point
  • #7,422
  • Mar 26, 2016 10:19am Mar 26, 2016 10:19am
Quoting server2712
Thanks Akt for useful info on confirmation entries. Can u explain in same manner about set&forget entry. It will be very helpful for all..... Thanks again.....
Hello server2712
please see picture

best wishes
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Be careful what you think because your thoughts run your life..Solomon
  • #7,423
  • Mar 26, 2016 11:19am Mar 26, 2016 11:19am
Hello everyone

A quick word on using the dollar index as an odds enhancer - usually used when trading a currency relative to the USD.
please see picture

best wishes
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Be careful what you think because your thoughts run your life..Solomon
  • #7,424
  • Mar 26, 2016 11:46am Mar 26, 2016 11:46am
Hi Akt. On the Daily chart you write " NOT A 2:1 FALL AWAY SO WE CAN ONLY TAKE A SHORT WITH PRICE INSIDE THE ZONE.
THAT HAPPENED IN THE BLUE CIRCLED AREA"

1. If we have 2:1 fall away, so we can short outside the zone. No 2:1 fall away- short ONLY inside D1 zone. What does it mean? I didn't undestand this moment of your analysis. Can you explain me?
Because the entrance on H4 is outside this D1 supply zone (the blue circled area).

2. You didn't take D1 set&forget short inside Monthly SZ. Only confirmation. Why
  • #7,425
  • Mar 26, 2016 1:56pm Mar 26, 2016 1:56pm
Quoting conom589
Hi Akt. On the Daily chart you write " NOT A 2:1 FALL AWAY SO WE CAN ONLY TAKE A SHORT WITH PRICE INSIDE THE ZONE. THAT HAPPENED IN THE BLUE CIRCLED AREA" 1. If we have 2:1 fall away, so we can short outside the zone. No 2:1 fall away- short ONLY inside D1 zone. What does it mean? I didn't undestand this moment of your analysis. Can you explain me? Because the entrance on H4 is outside this D1 supply zone (the blue circled area). 2. You didn't take D1 set&forget short inside Monthly SZ. Only confirmation. Why
Hello Conom,
Thank you for the questions
Let me elaborate further.

1. I was pointing out that the reason we could not short that daily SZ without going to the 4hr chart for a confirmation entry was because of the quality of the daily zone. Like me, you know that for a SZ to qualify as a trade-able zone it must fulfill at least 2 basic criteria before we even apply the odds enhancers.

Those 2 basic criteria are - a minimum move away from the zone of a distance of at least 2 times the size of the zone & the second one is that price must remain away from the zone for a minimum of one period or candle before returning to the zone.

When a zone fulfills criteria 1 but not criteria 2 we can't trade the zone
When a zone fulfills criteria 2 but not criteria 1 we can trade the zone BUT only as a confirmation entry, not a set and forget.

Now, that daily zone fulfilled criteria 2 but not criteria 1 so that's why we needed to go down one more time frame for an entry once price gets to that daily zone.

Secondly, with regards to the other part of your question about where we short - please understand, SAD traders don't short outside supply zones or buy outside demand zones. We just can't. There would be no rationale for it.

As you rightly said, the 4hr zone entry was outside the daily SZ because there was no opportunity to sell inside the daily SZ once price got there since, even though 2 SZs were created inside and very near to the daily SZ, the only one price returned to was the one we entered at, the 3rd SZ

2. I have answered question 2 using a picture of the monthly zone drilled down to the daily chart

Hope this helps make things clearer

Best wishes
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Be careful what you think because your thoughts run your life..Solomon
  • #7,426
  • Mar 26, 2016 2:19pm Mar 26, 2016 2:19pm
Akt! Thanks, I knew that, just wanted to clarify.
  • #7,427
  • Mar 26, 2016 3:43pm Mar 26, 2016 3:43pm
AKT

These are 2 pictures of AUDUSD CURVE from your posts Post 7,087
Post 7,222
First you wrote that it is not a zone , then used it for the curve as a demand. Why did you change your opinion about this level.?
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  • #7,428
  • Mar 26, 2016 10:10pm Mar 26, 2016 10:10pm
Quoting conom589
AKT These are 2 pictures of AUDUSD CURVE from your posts Post 7,087 Post 7,222 First you wrote that it is not a zone , then used it for the curve as a demand. Why did you change your opinion about this level.? {image} {image}
Well spotted Conom
That was my mistake.
It is an inherited DZ and is the curve DZ

Best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #7,429
  • Mar 27, 2016 5:51am Mar 27, 2016 5:51am
Hi AKT
Can you please elaborate following regarding confirmation trades
1) Scenario when break of trend line is sufficient to take confirmation trade.
2) Scenario when break of trend line & removal of opposite zone is necessary.

Thanks in advance
  • #7,430
  • Mar 27, 2016 3:28pm Mar 27, 2016 3:28pm
For you Kiwiforex.
Thank you for pointing this typo out

please see the updated picture.
see if you can spot the difference between this one and post 7405

best wishes

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Be careful what you think because your thoughts run your life..Solomon
  • #7,431
  • Mar 27, 2016 3:40pm Mar 27, 2016 3:40pm
Quoting Vsm
Hi AKT Can you please elaborate following regarding confirmation trades 1) Scenario when break of trend line is sufficient to take confirmation trade. 2) Scenario when break of trend line & removal of opposite zone is necessary. Thanks in advance
Hi VSm.

Remember we trade imbalances, so the break of a trend line is never really enough to justify taking a confirmation trade for me. Other SAD traders i know may do differently.

I prefer to have a TL break (evidence of a loss of trend momentum) followed by the removal of the nearest opposing zone (evidence that the opposing set of players to the trend in the market have started taking control) and then trading the pull back.

This is just my take on it. Other SAD traders I am aware of either do the same or have their own slant to it, though not that different.

best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #7,432
  • Mar 28, 2016 2:32am Mar 28, 2016 2:32am
Quoting Akt
For you Kiwiforex. Thank you for pointing this typo out please see the updated picture. see if you can spot the difference between this one and post 7405 best wishes {image}
Thank you so much Akt for that, I really thought it was me not understanding things 😊 Your posts are invaluable. This is a super thread, thank you all so much to everyone especially Alfonso
  • #7,433
  • Edited 3:20am Mar 28, 2016 2:49am | Edited 3:20am
Quoting Akt
For you Kiwiforex. Thank you for pointing this typo out please see the updated picture. see if you can spot the difference between this one and post 7405 best wishes {image}
The difference? - 4 IS NOT A DEMAND

But Alfonso would say " That's the daily demand zone (took out supply A), you like it or not. It's not valid, but demand zone

Post 5,704
"A valid zone needs 2:1 and consolidation away, you say it won't need, or at least I understood that.
A zone is a confirmed imbalance by itself when it breaks a trendline or takes out an opposing zone."
  • #7,434
  • Mar 28, 2016 4:17am Mar 28, 2016 4:17am
Hello Everyone,

An example of a trade that a friend here pointed out to me over the holidays.

I have deliberately removed the time frames because they are irrelevant.
The methodology works regardless of time frames.
Think of them in terms of the time frames you trade.
What is important is the process taken to arrive at the trading decision

"A general who will win will make many calculations before the battle
A general who will lose will make few calculations"
- Sun Tzu

Best wishes

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Be careful what you think because your thoughts run your life..Solomon
  • #7,435
  • Mar 28, 2016 4:28am Mar 28, 2016 4:28am
Quoting conom589
{quote} The difference? - 4 IS NOT A DEMAND But Alfonso would say " That's the daily demand zone (took out supply A), you like it or not. It's not valid, but demand zone Post 5,704 "A valid zone needs 2:1 and consolidation away, you say it won't need, or at least I understood that. A zone is a confirmed imbalance by itself when it breaks a trendline or takes out an opposing zone."
Hello Conom.
I am not totally sure i understand your question.

Could you clarify it for me please?

Just based on my current understanding of your comments above,

DZ 4 is demand.
It is an inherited DZ.

DZ 5 took out SZ D and so acquired the status of a demand zone
DZ 4 is a DZ below DZ5 and so inherited the demand zone status from DZ 5.

I apologize if I have misunderstood your question.

Best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #7,436
  • Mar 28, 2016 4:55am Mar 28, 2016 4:55am
Quoting Akt
{quote} Hello Conom. I am not totally sure i understand your question. Could you clarify it for me please? Just based on my current understanding of your comments above, DZ 4 is demand. It is an inherited DZ. DZ 5 took out SZ D and so acquired the status of a demand zone DZ 4 is a DZ below DZ5 and so inherited the demand zone status from DZ 5. I apologize if I have misunderstood your question. Best wishes
Akt you misunderstood me/ I just answer to you question about the difference between two pictures. of Post 7,430
and Post 7,405

I wrote about this Demand
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  • #7,437
  • Mar 28, 2016 5:01am Mar 28, 2016 5:01am
HI, AKT !
Please explain to me why curve dz is draw like this(if you have time).thanks a lot !
  • #7,438
  • Mar 28, 2016 5:31am Mar 28, 2016 5:31am
Quoting conom589
{quote} Akt you misunderstood me/ I just answer to you question about the difference between two pictures. of Post 7,430 and Post 7,405 I wrote about this Demand {image}
Oh, i see.
My bad. Sorry. I knew i didn't get it

We could have a big discussion about that zone but no matter. It did not consolidate away so it is not trade-able demand
However, looking at what price did after that base, as you can see, the outcome of the S-D Equation out of that zone was a rally, a brief one candle rally but a rally none-the-less.

Having said that, what is most important is that the area should not be used to enter a trade, even if price did rally from there as it did.

best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #7,439
  • Mar 28, 2016 5:35am Mar 28, 2016 5:35am
Quoting Akt
Hello Everyone, An example of a trade that a friend here pointed out to me over the holidays. I have deliberately removed the time frames because they are irrelevant. The methodology works regardless of time frames. Think of them in terms of the time frames you trade. What is important is the process taken to arrive at the trading decision "A general who will win will make many calculations before the battle A general who will lose will make few calculations" - Sun Tzu Best wishes {image}
HI AKT! Regarding this post I don't understand why is the curve DZ is considered demand since it didn't break any trend line neither removed supply. Or in the curve time-frame you just look for the imbalances?Thanks in advance
  • #7,440
  • Mar 28, 2016 5:47am Mar 28, 2016 5:47am
Quoting Akt
{quote} Oh, i see. My bad. Sorry. I knew i didn't get it We could have a big discussion about that zone but no matter. It did not consolidate away so it is not trade-able demand However, looking at what price did after that base, as you can see, the outcome of the S-D Equation out of that zone was a rally, a brief one candle rally but a rally none-the-less. Having said that, what is most important is that the area should not be used to enter a trade, even if price did rally from there as it did. best wishes
Sure/ You're right
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