reaches that level. Not surprisingly, most trading manuals start by shedding light on this issue as it's one of the pillars of technical analysis. Price decreases when supply is higher and demand is lower. Sell when the price bounces downwards from a supply area. It is more the fact these these levels are so universally accepted and therefore so closely watched and traded by so many traders, that they often take on considerable price action significance. When we trade the Forex markets, we are trading economies. It is very hard to be precise with those levels and here it is more of an art than science.
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This chapter attempts to explain that there are no secrets when it comes to exploring the grafik trading forex live market foot print of exchange rates across a chart. Supply and demand zones are very similar if not the same. Don't think of market participants as two opposed groups of well defined buyers and sellers. As you can see from the demand zone above, there is a large lower tail that is included in the zone. Who has not opened a position and seen how the market immediately turned in the opposite direction to finally liquidate it at the stop loss? After the price decreases, it reaches the magenta demand level on the chart, creating another bounce. Does Not Expect Miracles As with anything else, supply and demand zones have their cons, as well. Each time price revisits a supply zone, more and more previously unfilled orders are filled and the level is weakened continuously. When the price action reaches this level, the orders start to get executed. As noted earlier, when the price action reaches a supply or demand zone, it is likely to reverse its direction. As you can see every time price approaches the supply zone it quickly jumps back.