Supply and Demand is one of the core strategies used in trading. It focusses on the ancient laws of supply and demand and how price moves in a free-flowing market. The foundation of this strategy is that the amount of an instrument that is available and the desire of buyers for it, drive the price. It identifies zones on the chart where demand overwhelms supply (the demand zone), driving the price up or where supply overwhelms demand (the supply zone), driving the price down. Most supply and demand traders wait for the price to enter these zones, where major activities of buying or selling have taken place, before entering a long or short position themselves.
It makes sense to buy at a demand zone and to sell at a supply zone, but keep in mind that fresh zones are more effective than retested ones. They can be used as entry zones for a continuing trend or as reversal zones for a changing trend. Trades can be made aggressively or conservatively, each with their own rules of entry and exit. TradingView has a smart drawing tool that allows users to visually identify these levels on a chart.
Looking at the 4hr time frame this pair is at major Supply Area. It has failed to break through 111.950 on multiple occasions. It has come back to test this zone and once again it has failed to break and we can see a nice opportunity to go Short.
Anticipating Ping-Pong between 4Hr support and the Daily established supply zone prior to a drop.
TP 1 at 4Hr Support
TP2 at 0.87 (Last consolidation zone)
TP3 at Daily support
Lets see what happens...
If USDMXN to bounces off of either of the trendline we could be looking at 600-2000 pips on this trade. However, we must wait for confirmations to be met before going in. I need the 2hr Downtrend to be broken + a 4hr/Daily reversal to form before going long.
Looking to go short off of GBPNZD's Supply Zone. Looking for a break and retest on this 1HR/2HR CTL. Initial targets will be 1.9315 (Demand Zone). We can look to go long if confirmations are met off of the either the Demand Zone or The Uptrend.
USDCAD has approached a 'Supply Zone' the 2hr Counter-Trend line has been broken just waiting for this retest to finish and a solid rejection before going short.
-Initial Targets will be the Demand Zone. Next Targets will be the Daily/Weekly Uptrend.
-If confirmations are met and reversal patterns do form on the Demand Zone I will look to go Long.
Second Entry for me on this pair. We had multiple rejections from the upside from this pair on a daily frame. Confirmation on entry is a a three pin formation followed by a Daily closure of a shooting star Marabozu candlestick.
Still have my short running from the previous gold trade I posted. However, Gold is starting to make it's way to my final target where we could look to go long. Wait for a reversal pattern to form before doing so.
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