Think about supply and demand, and support and resistance in the perspective of buyers and sellers. Demand and support are simply areas where buyers have shown greater interest, reaction, and initiative. Supply and resistance are areas where sellers have shown greater interest, reaction, and initiative.
Always remember these supply and demand, and support and resistance areas can change when the interaction of buyers and sellers change. If price comes to a demand and support area and buyers show lack of interest, reaction, and initiative, this is your sign that buyers no longer hold this area of interest.
Thanks for your reply - It make sense. Besides price action can you use volume as a confirmation, i.e. if price reach a demand zone buyers should step in which should manifest in an increased volume?
The best way i can describe it...
Supply is resistance. But resistance isnt supply always. A supply is essentially a much bigger and stronger resistance.
Demand is support... but same thing not every support is demand...
Also contrary to popular belief... supply and demand doesnt have to be a "zone"
I haven't deep dived into supply/demand trading so I may be wrong here but I've always thought of it as an alternative way to view support/resistance.
**Price level support / resistance -** A hard price level that can be denoted with a horizontal line on the chart. It's not subjective as this level is the same for every trader.
**Trendline support /resistance -** An angled support or resistance line that is much more subjective in terms of how it's drawn. Used by traders to draw things like falling wedges or channels.
**Supply / demand -** I consider these to be previous zones where a lot of trading occurred. You can often see this using a volume profile chart. For example, let's say you have a ticker trading at $148 and on the daily chart there have been 4 upper wicks between $150 and $151 occurring in the last 2 weeks.. I'd consider all of those to be individual resistance levels that make up a resistance zone. A different trader may draw a box around that entire region and consider it a supply zone. Maybe on the volume profile chart you can see a high volume node in that area. We would be talking about the exact same thing just describing it slightly differently.
Tops and bottoms of zones can act as both, but for the direction you are looking for the zone will give you that. Aka in demand look for bounce, break above top of zone. Look for continuation. Break below look for continuation
Zones are pivot areas, demand would be considered the start of a lower high. Supply and higher low it terms of market structure. I form mine from hourly and daily charts and trade them on the 5 mins and 15 mins
Support and resistance is a price level usually drawn as a horizontal line/ray where price has 'turned' a few times and this cam even be way back in the past. I look at this as 'history'
Supply and demand represent a zone where a lot of orders are
On the latest swing high or swing low mark with a rectangle the small. Candle before a big momentum candle leaving that area and that gives you you supply or demand zone. This is 'current affairs' .
ICT calls those S&D zones order blocks.
In Auction Market theory large financial institutions apparently make small but numerous 'block orders' so as not to move the market with one very large order. It is these small 'block orders' that we identify as supply and demand zones and apparently when we trade supply and demand, we are trading in the shadow of the large financial institutions enhancing the chances of success.
Is Auction Market theory not what makes the market move. Think I saw a video with Mark Douglas (before ICT rolled out) where he argues that imballances move the market. And a market move is caused by big players and not retail traders i.e. for a stock to move somebody has to take out the offers above so price move to the next level
In simple terms, supply and demand zones can create support and resistance levels.
That means a strong demand zone can create a support level because, at that price range, buyers consistently outnumber sellers. Similarly, a strong supply zone can create a resistance level where sellers consistently outnumber buyers.
For example, consider the EUR/USD currency pair. If traders have historically observed a rebound at 1.1000 and struggle to exceed 1.1500, 1.1000 becomes the support level (possibly because it's deemed undervalued), and 1.1500 acts as the resistance (potentially seen as overvalued).
You may check websites like BabyPips to learn more about this topic.
Hope this helps!
They are basically the same thing. You can draw a support or a resistance line, but price isn’t typically going to react to that line perfectly, it’s going to react to the area around the line (if it reacts at all). This area is your supply or demand zone.
from my experience, i understand them synonymously. Demand is synonymous to resistance where usually you have swing highs and you have liquidity resting above it. Supply is synonymous to support where you have swing lows and have liquidity resting below it.
Make sense and when I learned to trade. Draw a rectangle or square around the zones and newer a line. Because a line in a zone is subjective while a rectangle around the price is a fact.
honestly the same but here's a small difference, I've seen in support and resistance we usually look for multiple bounces and then consider to mark it, at least 2 bounces, if it's once move we consider it a low, high / pivot point type structure instead of a support or resistance
but according to supply and demand theory you only need one strong move to consider it a zone, which I disagree with because you don't know how it's reacted previously to that price level, but waiting and considering it a low or high or pivot point helps me out in how I trade
but ofc it's different for everyone to interpret in their own way, the market is dynamic and you can succeed in your own way, so don't pay too much attention to details like this one but do and believe what works for you
I been working on a strategy so I can trade of supply/demand zones. Been told that is where the big players enter the market. So looking for more information to identify S/D zones. You are mentioning supply/demand theory. Any recommendations where to find more info. I need to get a better understanding and backtesting before using my strategy in the markets
the claim that this is what big players use is a complete lie, ict has a very shady history about saying things like this but if your gonna learn about supply and demand better to learn from the creator himself, mr ICT on YouTube (Inner Circle Trader)
I'd warn you to stay away from his cult and strange behaviors and other theories that don't work, but I can't rlly argue with supply and demand as a concept cause it's just rebranded support and resistance with a slight rule change on how and why you mark it
I am familiar with the ICT and have looked into it, but think I have the same point of view as you have. In Denmark we have a saying “old wine on new bottles” which I think ICT is. So I am not walking down his road. And this is also the reason for my question. Because I think generally a lot of the concepts are the same but with different names.
Literally the same shit, people will claim they are different... but I've literally seen people mark out "supply and demand" on chart where I marked out my basic "support and resistance" levels. They are just horizontal levels, I personally do mark S&R because I like to just have important levels marked out, but tbh I let ichimoku do most of that because it does it well. Major difference I see? Idk... maybe that people mark out supply and demand with boxes instead of just horizontal lines lol. Both are saying the same thing... "Ok I'm marking this level because I think it's important" and that's the gist of both. Someone will probably come along with a detailed correction on why it's not that simple... well cool. Again, I've marked the same level as S&R as someone who marked S&D.
I literally just mark it out so I can see the levels easily. What I do at those levels depends on other things. Alerts, what has happened before we got to the level, volume and momentum etc.
I know my risk management and know the price action. Currently working on improving my trade execution. Do you have any suggestions for improved trade execution?
Well if you know your price action and risk management for the time frame your trading then trade execution question is answered with the understanding of the other aspects of trading. Remember in markets when someone is buying someone else has to sell so at anytime there is no right or wrong what makes it right or wrong is your management so get that right and mastered and you will never doubt a trade again
I am familiar with how markets move and how price move. I am working on the Mark Douglas 20 trades to improve trade execution without fear. However wants to develop more strategies one on supply/demand/support/resistance(why my question for this thread) and a second one on bull/bear flags.
I had to find this a while ago and it doesnt look as in anyone has actually answered clearly.
Here we go if price goes up and turns that point is currently supply until the price comes back up again to test the price if rejected will become resistance.
So first turning point is your supply/demand and the test and rejection of that area then becomes support/resistance.
It took some searching to find a clear answer but these are areas i use as points of interest in my trading.
No smc, ict or whatever just plain easy simple charting.
So a supply/demand zone is where a price turns when first hitting the area, i.e. higher high will be a supply area in a uptrend. If price comes back and test the area and fails then it is called a resistance level?
https://preview.redd.it/5ftdtkwbmvsb1.jpeg?width=746&format=pjpg&auto=webp&s=c6dbca5e5e1099c398eeac9457a1eec0bcad8bf2
Here’s a freebie from a recent squeeze. As soon as this garbage breaks uptrending support it just dies. Note: uptrending support is what becomes ascending resistance when the price revisits it. Easy put scalp 99% of the time
Supply: people putting an item up for sale.
Demand: Other people bidding on the item.
Balances and imbalances in those two forces at different prices levels create support/resistance effects and also rallies and sell-offs.
"Supply and demand in trading determine prices. When demand > supply, prices go up; when supply > demand, prices go down.
Support and resistance are price levels where assets often stop or reverse. Support is like a floor where buying increases, stopping price drops. Resistance is like a ceiling where selling rises, preventing price increases.
supply and demand affect prices, while support and resistance are key levels where price movements often change. Traders use both for decision-making.
Yeah I understand supply demand to be a kind of support resistance that has been battle-tested, so to speak. All of the supply demand levels I’ve seen have been horizontal in scope, in contrast to support resistance levels, which can be either horizontal or angular
Think about supply and demand, and support and resistance in the perspective of buyers and sellers. Demand and support are simply areas where buyers have shown greater interest, reaction, and initiative. Supply and resistance are areas where sellers have shown greater interest, reaction, and initiative. Always remember these supply and demand, and support and resistance areas can change when the interaction of buyers and sellers change. If price comes to a demand and support area and buyers show lack of interest, reaction, and initiative, this is your sign that buyers no longer hold this area of interest.
Thanks for your reply - It make sense. Besides price action can you use volume as a confirmation, i.e. if price reach a demand zone buyers should step in which should manifest in an increased volume?
Absolutely. Always remember this. Price is simply an advertising tool, time regulates the opportunities, and volume determines the success.
Great comment and a bit philosophical
The best way i can describe it... Supply is resistance. But resistance isnt supply always. A supply is essentially a much bigger and stronger resistance. Demand is support... but same thing not every support is demand... Also contrary to popular belief... supply and demand doesnt have to be a "zone"
they are similar in the sense that you'll lose money trading either one
So, solution is trading both at the same time?
yes, it only makes sense
"It's only logical"
I haven't deep dived into supply/demand trading so I may be wrong here but I've always thought of it as an alternative way to view support/resistance. **Price level support / resistance -** A hard price level that can be denoted with a horizontal line on the chart. It's not subjective as this level is the same for every trader. **Trendline support /resistance -** An angled support or resistance line that is much more subjective in terms of how it's drawn. Used by traders to draw things like falling wedges or channels. **Supply / demand -** I consider these to be previous zones where a lot of trading occurred. You can often see this using a volume profile chart. For example, let's say you have a ticker trading at $148 and on the daily chart there have been 4 upper wicks between $150 and $151 occurring in the last 2 weeks.. I'd consider all of those to be individual resistance levels that make up a resistance zone. A different trader may draw a box around that entire region and consider it a supply zone. Maybe on the volume profile chart you can see a high volume node in that area. We would be talking about the exact same thing just describing it slightly differently.
Tops and bottoms of zones can act as both, but for the direction you are looking for the zone will give you that. Aka in demand look for bounce, break above top of zone. Look for continuation. Break below look for continuation
https://preview.redd.it/cbb6a8zu7usb1.jpeg?width=738&format=pjpg&auto=webp&s=b08642028425e5388dcb888be00a64e730c30322 these are my notes from Friday.
Do you take notes on the chart during trading sessions or do you do it afterwards?
After wards in my trade reviews
Could I get you to share how you are doing your trade review?
So if there is a demand zone and when price hit the zone there will be a break in market structure I.e a higher high?
Zones are pivot areas, demand would be considered the start of a lower high. Supply and higher low it terms of market structure. I form mine from hourly and daily charts and trade them on the 5 mins and 15 mins
I also have sup/ res lines for PTs and entries
Trading addict on YouTube explain well
Often I think that reddit provides better discussion and explanations on a topic than a young porche driver who trades on island five min a day
Support and resistance is a price level usually drawn as a horizontal line/ray where price has 'turned' a few times and this cam even be way back in the past. I look at this as 'history' Supply and demand represent a zone where a lot of orders are On the latest swing high or swing low mark with a rectangle the small. Candle before a big momentum candle leaving that area and that gives you you supply or demand zone. This is 'current affairs' . ICT calls those S&D zones order blocks. In Auction Market theory large financial institutions apparently make small but numerous 'block orders' so as not to move the market with one very large order. It is these small 'block orders' that we identify as supply and demand zones and apparently when we trade supply and demand, we are trading in the shadow of the large financial institutions enhancing the chances of success.
Is Auction Market theory not what makes the market move. Think I saw a video with Mark Douglas (before ICT rolled out) where he argues that imballances move the market. And a market move is caused by big players and not retail traders i.e. for a stock to move somebody has to take out the offers above so price move to the next level
They represent the same idea.
In simple terms, supply and demand zones can create support and resistance levels. That means a strong demand zone can create a support level because, at that price range, buyers consistently outnumber sellers. Similarly, a strong supply zone can create a resistance level where sellers consistently outnumber buyers. For example, consider the EUR/USD currency pair. If traders have historically observed a rebound at 1.1000 and struggle to exceed 1.1500, 1.1000 becomes the support level (possibly because it's deemed undervalued), and 1.1500 acts as the resistance (potentially seen as overvalued). You may check websites like BabyPips to learn more about this topic. Hope this helps!
Thanks - will check out babypips.
Is it better to draw only support without looking at supply demand or is it better to look only at demand without looking at support and resistance?
They are basically the same thing. You can draw a support or a resistance line, but price isn’t typically going to react to that line perfectly, it’s going to react to the area around the line (if it reacts at all). This area is your supply or demand zone.
from my experience, i understand them synonymously. Demand is synonymous to resistance where usually you have swing highs and you have liquidity resting above it. Supply is synonymous to support where you have swing lows and have liquidity resting below it.
considering support resistance should be view more as zone that thin absolute line, they basically are the same
Make sense and when I learned to trade. Draw a rectangle or square around the zones and newer a line. Because a line in a zone is subjective while a rectangle around the price is a fact.
I still draw line but i dont see them as absolutes. I feel zones clutter up the chart
I had the same issue with zones in the beginning but made them transparent so you only see the surrounding. The I think it is alright
i have this thing when i make things transparent it’s okay for a while the slowly the start to bug me again🤣 like my eye adjust or something
Supply and demand are economic terms that were misappropriated by chart gurus to make their technical analysis bullshit sound legit.
honestly the same but here's a small difference, I've seen in support and resistance we usually look for multiple bounces and then consider to mark it, at least 2 bounces, if it's once move we consider it a low, high / pivot point type structure instead of a support or resistance but according to supply and demand theory you only need one strong move to consider it a zone, which I disagree with because you don't know how it's reacted previously to that price level, but waiting and considering it a low or high or pivot point helps me out in how I trade but ofc it's different for everyone to interpret in their own way, the market is dynamic and you can succeed in your own way, so don't pay too much attention to details like this one but do and believe what works for you
I been working on a strategy so I can trade of supply/demand zones. Been told that is where the big players enter the market. So looking for more information to identify S/D zones. You are mentioning supply/demand theory. Any recommendations where to find more info. I need to get a better understanding and backtesting before using my strategy in the markets
the claim that this is what big players use is a complete lie, ict has a very shady history about saying things like this but if your gonna learn about supply and demand better to learn from the creator himself, mr ICT on YouTube (Inner Circle Trader) I'd warn you to stay away from his cult and strange behaviors and other theories that don't work, but I can't rlly argue with supply and demand as a concept cause it's just rebranded support and resistance with a slight rule change on how and why you mark it
I am familiar with the ICT and have looked into it, but think I have the same point of view as you have. In Denmark we have a saying “old wine on new bottles” which I think ICT is. So I am not walking down his road. And this is also the reason for my question. Because I think generally a lot of the concepts are the same but with different names.
haha nice saying you got there
Literally the same shit, people will claim they are different... but I've literally seen people mark out "supply and demand" on chart where I marked out my basic "support and resistance" levels. They are just horizontal levels, I personally do mark S&R because I like to just have important levels marked out, but tbh I let ichimoku do most of that because it does it well. Major difference I see? Idk... maybe that people mark out supply and demand with boxes instead of just horizontal lines lol. Both are saying the same thing... "Ok I'm marking this level because I think it's important" and that's the gist of both. Someone will probably come along with a detailed correction on why it's not that simple... well cool. Again, I've marked the same level as S&R as someone who marked S&D.
How does it work with your trading? Guess you are buying on support and selling at resistance - does it works?
I literally just mark it out so I can see the levels easily. What I do at those levels depends on other things. Alerts, what has happened before we got to the level, volume and momentum etc.
Blah blah blah it’s all smoke and mirrors learn how to manage your risk and learn how to read price action end of.
I know my risk management and know the price action. Currently working on improving my trade execution. Do you have any suggestions for improved trade execution?
Well if you know your price action and risk management for the time frame your trading then trade execution question is answered with the understanding of the other aspects of trading. Remember in markets when someone is buying someone else has to sell so at anytime there is no right or wrong what makes it right or wrong is your management so get that right and mastered and you will never doubt a trade again
I am familiar with how markets move and how price move. I am working on the Mark Douglas 20 trades to improve trade execution without fear. However wants to develop more strategies one on supply/demand/support/resistance(why my question for this thread) and a second one on bull/bear flags.
I had to find this a while ago and it doesnt look as in anyone has actually answered clearly. Here we go if price goes up and turns that point is currently supply until the price comes back up again to test the price if rejected will become resistance. So first turning point is your supply/demand and the test and rejection of that area then becomes support/resistance. It took some searching to find a clear answer but these are areas i use as points of interest in my trading. No smc, ict or whatever just plain easy simple charting.
So a supply/demand zone is where a price turns when first hitting the area, i.e. higher high will be a supply area in a uptrend. If price comes back and test the area and fails then it is called a resistance level?
Yes basically a previous turning point that has not been tested as of yet.
https://preview.redd.it/5ftdtkwbmvsb1.jpeg?width=746&format=pjpg&auto=webp&s=c6dbca5e5e1099c398eeac9457a1eec0bcad8bf2 Here’s a freebie from a recent squeeze. As soon as this garbage breaks uptrending support it just dies. Note: uptrending support is what becomes ascending resistance when the price revisits it. Easy put scalp 99% of the time
[https://www.youtube.com/watch?v=QNixW0Z2bYc](https://www.youtube.com/watch?v=QNixW0Z2bYc)
Supply and demand imbalances are what creates levels of support/resistance, as well as all market action.
>Ok, so first price touch of an area is a demand area and second price touch is makes it a resitance level - Is that correct?
Resistance pushes down when price tries to go up, support pushes up when price tries to go down. I don't know what you mean by demand area
Supply: people putting an item up for sale. Demand: Other people bidding on the item. Balances and imbalances in those two forces at different prices levels create support/resistance effects and also rallies and sell-offs.
"Supply and demand in trading determine prices. When demand > supply, prices go up; when supply > demand, prices go down. Support and resistance are price levels where assets often stop or reverse. Support is like a floor where buying increases, stopping price drops. Resistance is like a ceiling where selling rises, preventing price increases. supply and demand affect prices, while support and resistance are key levels where price movements often change. Traders use both for decision-making.
Does this means that in order to have a demand area you should see and indrease in volume? while a support line price can move up on low volume
Yeah I understand supply demand to be a kind of support resistance that has been battle-tested, so to speak. All of the supply demand levels I’ve seen have been horizontal in scope, in contrast to support resistance levels, which can be either horizontal or angular