— First look for significant move, then follow it to its origins where you might find a suitable level to evaluate further
— Make sure the initial move is significant on the same timeframe as the one you use for viewing your candidate level most clearly
— Check the distance that price traveled before the trend ended, longer distances mean larger initial imbalances and improved probabilities in the future
— The strong initial move can contain a few small retracements but not so many that make this move slow and weak
— Avoid opposing levels on the same and immediately higher timeframes, prefer to have a clear road ahead for your trade to run
— Make sure your level is placed correctly (low for Demand, high for Supply) in relation to the big picture's important tops and bottoms
— Trading the first return of price to a valid "fresh" level carries the highest probabilities due to the larger imbalance
— A valid level is considered "fresh" if price has not returned to it since its creation. It has nothing to do with how old the level is
— Trading only the first return of price to a valid, properly evaluated level can greatly increase your win ratio. Trading second or other subsequent returns will only dilute your trading edge.
Great analysis! I actually identified the same exact level but didn't get filled :(
I had a limit buy order @ 1.0686
Sylvi
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You should not have...
Shiiku
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Hey @tradewonk i like your supply and demand zone strategy and it actually works for me at times. But what happens when a gap is involved...? Like right before the epic move....!?
tradewonk
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@Shiiku, I don't really understand your question. But gap is almost only happening sometimes when the market open after a weekend, and i usually never keep trades open over a weekend. If you mean the "wick" on the candle before the significant move, then the wick is included the blue area, and your stop should be below the wick, because it have tested a price that was so strong that it change direction immediately.
Shiiku
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@tradewonk, I'm talking about the initial move that indicates the zone. So what if the initial move started right after a huge gap, would the zone be drawn from the first candle of that initial move or will it be from the bottom wick of the first candle to the beginning of the gap, well that's if the move was bullish....?
Shiiku
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@tradewonk, perfect example is the GU now on the daily/4hr chart...?
tradewonk
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@Shiiku, If it's that you mean, then the demand zone is there. Sometimes it will turn around before, but that's trading, we can not be accurate with alle setups.
Shiiku
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@tradewonk, o,o how do you even draw the zone coz I thought we only use the candle with the lowest wick and it's top wick (that length of the entire candle would be the zone)...?
tradewonk
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@Shiiku, depends on how big the wick is. i always draw after the previous candle of the significant candle, if the candle is small, i take the whole candle as a zone, if the wick is quite big i only take the wick as a zone. Hopefully in not so long, i will make some tutorial stuff on how to draw exactly the zones
Shiiku
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@tradewonk, oh ok thanx bro you really putting in much efforts to helping traders better themselves. Thank you very much.
I had a limit buy order @ 1.0686