How To Correctly IDENTIFY and DRAW SUPPLY and DEMAND ZONES | The Only Strategy you Need | Forex

[Music] let's get straight into it so lesson two how to correctly locate and draw your supply and demand zones and understanding discount and premium pricing so how and where do i draw my zone this is what a lot of you will be asking me so once we have identified our base you may ask what do we specifically mark out within the base do we mark out the entire base and the answer is simply no i often like to draw my zones of an indecision candle an indecision candle is a candle where both buyers and sellers come into power which leaves a candle with mainly wicks on either side and a small body usually the body would be in the center of this candle and it looks something like this so notice we have a rally a base and a rally right now this is our entire base right but what within the base do we mark out we look for the indecision candle now look these are three indecision cut four five indecision candles right so we look for the one with where the bodies in the center and has wicks on either side as you can see you can identify that right over here we have wicks on either side and the bodies in the center that would be our indecision candle now look how you play out so we marked out this this is our entire base right now if you took entry of the base you'd have your entry there and your stop loss there you'd have had a very big stop loss but as you can see we identified our entry from this indecision candle now you would have had your entry here and you could have had your stop-loss there or if you wanted to be safe had your stop-loss at the bottom of the base but in terms of entry you would have entered there at the base but you would have entered here if you went up the indecision candle now look how accurate that would have been so next question i'll get is if i identify multiple zones like this case of it we have a rally based rally here but we also have a rally base rally here so which zone do i choose do i enter there or do i enter there now let me teach you guys how to select which zone you would wait for understanding equilibrium discount and premium pricing is essential when trading supply and demand when identifying multiple zones you go with the zone that is within our discounted levels now how do we identify these levels to identify discounted and premium levels you must know how to identify the equilibrium equilibrium is the midpoint of a price range or the midpoint of a swing it is the level at which an asset is neither cheap or expensive therefore this wouldn't be be an ideal level we want to execute a trade of we want to be buying in at a cheaper rate which is below the equilibrium and sell at a premium which is above the equilibrium now an example of understanding this right say this is the low of a price range and this is the high of a price range the midpoint would be your equilibrium right is literally 50 of that price range anything above that is classified as premium and anything below that is classified as a discount right now these levels can easily be identified using our fibonacci tool these level the levels we are interested in are 62 70.5 and 79 as all of these are below the equilibrium for long entries your fibonacci has to be drawn from the swing glow to the swing high and the opposite way around when looking to go short the whole point of buying at a discounted level is to allow the trader to execute their trade at the best price now if we go back to this example again now with the knowledge i have just shared with you guys which demand zone would i look to take an entry of hint look at the fibonacci levels so now that i i marked out the swing low and the swing high we have our fibonacci levels here now we now remember 50 is our equilibrium and what did i say about equilibrium it is the level yeah is the level at which an asset is neither cheap or expensive therefore this wouldn't be a level we'd want to execute a trade of right so this the one zone here is at equilibrium so we don't want to be take an entry here we want to look for discounted zones right now look at this zone that had marked up that aligns perfectly with point five and seventy nine percent so now out of these two zones with what i just taught you which zone would you go with this one right as it's in a discounted level so when price pulls back institutions would be buying at a cheaper price to then push price back up does that make sense so as you can see here price pulls back to our discounted demand zone and then moves over to the upside now i'm going to show you guys a quick example on a couple trades this one fairly straightforward right look at this so we have a drop we have a base we have a drop which broke structure right that would have been your breakup structure right over here let's replay price so one we have that break of structure two we have all of this imbalance so we now know price has to pull back to fill in this imbalance right and what do we see right over here a beautiful indecision candle right even clean on the 30 minute so you'll mark up that indecision candle right and i would wait for price to pull back now you will take off fibonacci tool mark out the high and we'll mark out this ring low now look at the fibonacci levels does this zone align with the discount uh sorry the premium yes it's in our premium level and remember we want to sell anything above the equilibrium because it would be at a premium price right so now when price starts to pull back it breaks through equilibrium we don't want to be looking to sell yet we want to sell off a zone that is within our premium range and we have one that aligns perfectly right here so we'll wait till price taps into it there we go we'll be looking to short from this point here with our stop loss at the wick and we'll target the or just talking this area here i've already marked up so let's see what happens and boom tp hit now does it make sense why i selected this zone number one it broke structure number two we have a clean indecision candle number three this zone aligns perfectly with our discounted fibonacci level so this will be classified as a premium supply so when price pulls back into it we would look to sell off now let me guys let me show you guys another example euro jpy this is a trade that hasn't played out fully yet but we're we're in the blues as you can see only now um it's starting to make a move right so why did i take entry of this premium supply right now this is the whole swing point right this is the swing high this is the swing glow now look at this zone that i have marked out over here right actually let me go on a clearer chart because it's too much drawing from this one see so number one price broke this structure number two all of this imbalance right so let's actually replay price back to this point here okay so number one once you get that break of structure you'll fib out the swing high to the swing low now you look for your discounted levels the 62 71.5 and 79 levels now at these discount levels do you see any zones we can identify one right over here correct so now we'll mark out that zone because it's within the discounted levels makes sense sorry the premium levels so this is what would classify as a premium supply so now what would we do we simply wait for price to pull back into this area of pre this premium area which aligns perfectly with this four hour supply and then would look to sell it off now as you can see as price approaches there we go we would have sold off here and this is current price right now and i'll potentially be looking to target this area of imbalance right over here so i'll potentially target this whole area here and entry there with rtp on it now does that make sense look and look at our base right very clean indecision candle bodies is right in the center with wicks on either side that's the confluence number one confidence number two we have a drop based drop confidence number three broke structure confluence number four it's in our premium fib level right that's why we took this trade another example um i'll leave this one now i'll show you a lot better examples and again i already showed you guys this example but let me show you why i specifically chose these zones so now on the hourly right entry number one let's pull priority price back at this point here so number one we have that break of structure once we got that break of structure we notice that there is imbalance right this imbalance is now about to be filled which zone do we take an entry of this is our swing high this is our swing low so now let's find our discounted areas actually let me go on a fresh chart oh to avoid any confusion sweet where was it it was right over here cool this is marking for not quickly that was the equalize that got taken out right that was that break of structure now once we mark out these we'll start to look for our entry point cool so again take off fibonacci mark out the swing high i'll cut the swing low right way to wake now we have imbalance we already anticipate that price is going to pull back to fill in this imbalance now which zone do we sell off from the ones that is within the discounted area so we can see the seventy point five and seventy nine percent we look we can identify a very nice indecision candle right over here so now we'll take our rectangle tool mark our indecision candle and would wait for price to pull back to that zone so we can sell off entry number one complete entry number two more liquidity number here number again that break of structure right liquidity created down below price beginning to pull back we'll mark out this new price range so this high to that swing low and what can we identify with this zone it aligns perfectly with the 70.5 and the 79 percent so that would be another premium supply right that would be your entry number two wait for price to react of it there we go you've got your entry right over here and price sold off again what do we have what happens right over here no wrong so sorry and let's replay price right to this point here so again price continued to break structure but what did it do left more imbalance right now we what we've already anticipated our price is going to pull back to fill in this imbalance but now we wouldn't want to look for a zone to then sell off so to fib out again the new price range that's the high and that's the swing low right look for discounted areas we can see this nice candle right here so this would be our new area of supply now wait for price to pull back into it there we go another entry to seller from right now for this entry that we we identified on the 15 minute once price reacted of that entry we identified that price created equals right double bond and it started to pull back and there was imbalance right so we already know our price is going to pull back to fill in any imbalance so now we look for areas didn't sell off from right that's the swing high that is the swing glow this is a 62 17.5 79 the 62 we can clearly identify this 15 minute indecision candle right over here right so now let's mark that out we want stop loss right there and let's wait for price to react of it there we go sniper entry and price continued to sell off right i hope that was fairly straightforward if you want i can show you another example eg four hour actually let me take our fresh chop cause i already got my drawing on this one what's going on euro gpp sweet head back to that four hour and let me show you guys why i took this entry cool all right number one we had that break of structure number two we had this liquidity right so let's replay price back to this point so once we identify this breakout structure and this liquidity that needs to be taken out and this imbalance that has to be filled we know that price is going to pull back and then sell off right but where are we going to take an entry from step number one take out your fibonacci mark out the swing high all the way down to the swing glow and then we begin to look for our discounted areas 62.62 we don't see anything no base 70.5 percent no base just imbalance seventy nine percent what can we see a discounted supply so we're interested in this area here right so let's go over our conferences again number one break of structure minor break of structure number two liquidity needs to be taken out number three imbalance that price has to pull back to fill in number four this pre this premium supply unmitigated within our premium level all of these conferences are built have been built up now we wait for price to pull back to that area of supply and then would look to sell it off now entry would have been off the wick just like so and price would have sold off as it did right and let's go for one more um example uh khf do you have anything for that no i haven't i didn't take a trade yet but i'm looking at this setup why am i looking at this setup simple we have imbalance we've got that break of structure right and if we flip it up from the low to the high what can we identify a discounted demand right and if i head over to that 30 minute i'm sure i can show you a lot the zone i'm going off with which is right here rally base cleaning decision candle and then a rally right and we've got this imbalance and that breakup structure that is why i'm looking to take entry of this discounted demand right pound cad i already showed you like this example and said dgpy we use djpy what premiums perfect this is an example for premium supply sweet so we got a rally a base and a drop that drop didn't break structure but what did you do leave us some liquidity so when price started to pull back and fill in this imbalance i identified a zone right over here okay now if i fib up the swing high to that swing low what can we see this base here aligns perfectly between our discounted levels and as you can see price pulled back to the zone and then sold off yeah so now you'll understand how we locate our zones and which zones to select simply go off the zone that is in the premium or the discounted level preferably the ones that align with the 70.5 and the 79 so again you guys have any further questions feel free to drop me a message and i'll help you guys out all right take care

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Length: 19min 50sec (1190 seconds)

Published: Sat Jul 31 2021