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Supply & demand zones: What went wrong on this trade?!
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!
Can you help answer these questions from other members on NexusFi?
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?
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.
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
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.
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