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Supply & demand zones: What went wrong on this trade?!
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Supply & demand zones: What went wrong on this trade?!

  #11 (permalink)
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supermht View Post
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that is not correct supply zone, the area you entered is in the middle of nowhere, the edge should be at the top or bottom of zone, the danger area is the reaction low before the high, which is the zone bottom I drew, but when price returned to that danger area, we saw a strong demand bar breaking that area, we know demand resumed and overcame supply, no short trade should be taken before we see new supply appears.

Hmm... not quite getting what you wrote. How did you determine the lower limit of that zone? Can you explain that, and what is a danger zone to you? Thx!

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  #12 (permalink)
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trendisyourfriend View Post
My opinion on your trade is that it was correctly envisioned but it did not work due to strong demand in line with higher time frame in the context of the sentiment created by the retail sales report. But the area was spot on and could have worked in the absence of the strong sentiment. This is just a trade and your reasons to take it have nothing to do with the final outcome. The trick is to be consistent in your approach.

This might be a reason, I failed to draw the zones in the daily and weekly charts, I have yet to do that... one of the learnings of that trade for sure!

When bars enter a zone, is there a way of telling what the "sentiments" are?

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  #13 (permalink)
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@Croni
Here is what i do.Ask this question:

Where was the last swing on your chart?
If it's below you(current price)then sentiment is UP.
If the last swing is above you( current price) then sentiment is DOWN.
I prefer to think in terms of momentum.They got the snow balling rolling and it was getting bigger as price punched higher.

As an example,the chart you posted,you were stepping in front of a market which was chewing the offers out and was doing so like it was late for a doctors appointment.

What I have seen over the last few years is aggressive deliberate moves inside structure.These are happening due to the fact that anyone who has some bank,can force price through these areas where there is lack of liquidity and blow anyone out who is shorting through here(it would appear that in this case shorting after a good move down will likely lead in at least some sort of follow through lower,but not the case).
All they need to do is push it high enough to force traders out(squeeze)and get the longs involved.By the time you can blink,they've filled the pocket and the stops have been taken out above the swing high.Its easy money if you can do it.
Sometimes the news acts as a catalyst,other times it's pure gaming.
My suggestion is never stand inside that zone looking to sell premium/buy discount.They will run you through.
I can show you chart after chart where a move down is followed by a tear higher that is plain nuts.

rgds

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  #14 (permalink)
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Croni View Post
Hmm... not quite getting what you wrote. How did you determine the lower limit of that zone? Can you explain that, and what is a danger zone to you? Thx!

the reaction low before the high was broken, this is bottom of zone. proper trade is retest of this broken point, but due to huge demand bar, short should not be taken

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  #15 (permalink)
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Croni View Post
This might be a reason, I failed to draw the zones in the daily and weekly charts, I have yet to do that... one of the learnings of that trade for sure!

When bars enter a zone, is there a way of telling what the "sentiments" are?

I did not have a complex analysis on the higher timeframe. Just simple observations based on balance areas, probes outside these areas and reactions following such probes.

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  #16 (permalink)
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trendisyourfriend View Post
I did not have a complex analysis on the higher timeframe. Just simple observations based on balance areas, probes outside these areas and reactions following such probes.

Are balance areas the same as S&D zones?

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@Croni

Yes,balance areas can and do act as support and resistance.
Rgds

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  #18 (permalink)
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switchtrading View Post
Yes agree with supermht.
Looks like a pocket fill and continuation to me also.The squeeze was on here for sure.

I learnt a lesson doing this on CL a few years ago trying to sell down a market that was ripping.Never again.

My rule is if price is rising I'm a buyer with momentum.If price is falling I'm a seller.
Only after an obvious shift will I get involved.
Price is never to high to buy.And just when you think it can't go any higher it absolutely will and leave you wondering why you were selling against sentiment in the first place.
I gave up predicting turns and focused on trading current price movement with momentum.

rgds

+ sextillion..the key to momentum trading. So true,it hurts.

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  #19 (permalink)
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I trade using supply and demand, and the best way to trade out of supply and demand areas is to use patterns for entry... So instead of just place an order in the SD zone at random, what for the market to confirm that it wants to hold at that area. If not, it might breakthrough and retest that area in the other direction...Just my 2 cents

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  #20 (permalink)
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WillSmithRules View Post
I trade using supply and demand, and the best way to trade out of supply and demand areas is to use patterns for entry... So instead of just place an order in the SD zone at random, what for the market to confirm that it wants to hold at that area. If not, it might breakthrough and retest that area in the other direction...Just my 2 cents

What patterns do you use? I just learnt the hard way that trading a zone without confirmation can be painful :-)

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