Recently I discovered the concept of trading in function of supply and demand. Technically, I believe that this is a for of price action, since you still look at the price fluctuation.
Basically what I understood from what traders on YouTube said is that we draw zones of supply and demand, and enter in these trades when these zones are tested again in the future.
[B]For both zones, it should be considered from the moment that there is a sharp movement in the opposite direction from this price level.[/B] We take it down on note, and wait for a retest in the future. If we see that this level is retested (ex: 2 days after) and that the pair is now struggling to continue, we can enter in this market by assuming that the previous level is still holding.
[B]Also, it’s worth to mention that ONLY if the level retesting seems to be struggling that we should enter in in the trade.
[/B]
I’ll bring pictures later, but are my thoughts accurate so far?
There some demand and some supply zones, I drew both.
I picked the ones that follow exactly what I said: The levels after a quite sharp movement, and then retested. We can see the retest struggles with all the black wicks hanging around, showing rejections of this price.
Of course, some of them are not perfect, as they can sometimes surpass the initial zone for a bit.
I guess your referring to something like this? GU daily and a significant support/ resistance level. Certainly worth watching but less reliable after several tests.
EDIT: Ahh… posts crossed around the same time. So your referring to swing high/ low. I’ll get back to you.
Well, supply and demand zones is just another way to say S/R levels in my opinions. However, I do believe that if a level is tested for multiple times, wouldn’t be more valuable than if only tested once?
