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Hey everyone. Hope you're all
doing well. Welcome to the
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video. So we're gonna go
through supply and demand the
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theory. Um exactly what it is.
Because our strategy sort of it
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revolves around supply and
demand you know order blocks et
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cetera. So it's definitely
important to know exactly what
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it is. We're also getting to um
consolidation and expansion. Um
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we start with that and then we
go from there. So, If we start
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on the left here, the markets
either do one of two things. So
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price either consolidates or
expands. Now if you come from
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previous strategies er you may
know this as impulsive
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correction. So the correction
would be the consolidation
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phase. And the impulsive phase
is known as the expansion. So
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starting on consolidation this
is a period in a market where
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price is moving calm. Which
moves in a range known as the
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dealing range. Now we will be
able to identify clear height
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and low to this range. So
you've probably heard of the
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term range bound or ranging or
consolidating. This means that
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price is typically staying in
one area and just moving
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sideways rather than moving up
or down. So again a range bound
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market means that price is
typically staying in one area
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er with sideways price action
rather than in one direction up
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or down. Now this range can be
tight meaning a spread of only
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a few pounds or dollars or the
range can be loose meaning a
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spread of hundreds of thousands
of pounds or dollars. From that
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that range higher to the range
low. Now this will partly come
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down to the time frame that
someone is implementing. Now
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usually the lower the time
frame the tighter the spread.
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Meaning it can be a few pounds
or dollars. And the higher the
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time frame the looser the
spread meaning the more money
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basically. So it could be
thousands, hundreds of
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thousands. Um again uh
consolidation is a state in the
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market where prices moving calm
and ranging. Or you know range
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bound it's just sideways price
action and if we look at this
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diagram down here you can see
this is this would be our
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consolidation phase where price
is moving sideways so you can
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see going up down up down
sideways price we aren't moving
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you know in one direction so
moving into expansion this is a
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period in the market where
price is moving aggressively in
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one direction or the other. So
we will we will see an
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impulsive move to the upside or
downside. Where price will give
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us large candle bodies or wicks
As you can see here, we had a
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large impulsive move up. This
is this is expansion. So we
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will see large candles or large
wicks um in one direction over
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the other. So that's basically
consolidation and expansion.
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Slash impulse and correction.
Now what we're gonna do is get
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into supply and demand.
Starting on demand zones. Okay.
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So demand zones this is an area
of consolidation. That comes
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before an impulsive move
towards the upside. IE bullish
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price action. So this is our
demand zone. Was im
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so das ist
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So what we will usually see is
a range bound market followed
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by a bullish expansion. So
exactly this. Range bound
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market slash consolidation
followed by an impulsive move.
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Which is then creating this
bullish consolidation block. Um
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and this is the expansion up.
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This demand zone can act as
support when price when price
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action drops down into them. So
once we push up here this could
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be known as support but we know
it as you know order blocks or
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you know, consolidation, demand
zones, price can can fall back
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into them to enter longs and
close short positions. So
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again, demand zones can act as
support when price action drops
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down into them from the top
side. Demand zones are used to
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enter longs. So once price
comes back into them we can
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enter longs and or close short
positions. Okay? So how to mark
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off demand zones? Well we take
the the low of the range and
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the highest candle body or we
can take the actual trading
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range as a whole. So this would
be our range. We can take this
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but we would have you know all
the blocks within this range.
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As we get into. But this is
just a theory. So consolidation
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range bound expansion up I This
can act as support as our
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demand zone for price to come
back into so we can enter longs
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and or close you know short
positions. So supply and demand
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supply zones okay? This is an
area of consolidation that
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comes before an impulsive move
towards the downside. As you
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can see from this example which
would be bearish price action.
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So this is the bearish price
action we would see. Which
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breaks out of this
consolidation phase. A supply
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zone is sometimes referred to
as a bearish consolidation
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block. So what we will usually
see is a range by market
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followed by a bearish
expansion. Range bar market
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bearish expansion down.
Breaking out of this
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consolidation. Now supply zones
can act as resistance when
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price action pushes up into
them from the downside. So once
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we broke here price pushed back
up into supply zone and this
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can be used to enter shorts and
or close long positions. So if
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we're if we're looking down
here we may have something to
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the left IE a demand zone that
we can trade long back into so
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we can target you know the the
supply zone. And then look for
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shorts from this area. So how
to mark off supply zones? We
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take the higher of the range to
the highest point which would
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be you know the wick. And the
lowest candle body. Which would
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be the lowest bodies and not
not the wicks the actual body
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the lowest part of that range
but what I what I like to do is
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just take that that trading
range as a whole so the high
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and the low but in some
examples if we've got you know
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a huge wick then we can use our
initiative and take the the
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candle body and just look to
see where the actual range is
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and you know not account for
that week.
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So now we've got an example of
a demand zone. We got a
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expansion up which came after a
consolidation slash a range
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bound market and price then
came back into it so if we just
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take a look at this example
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had this range here. So this is
our consolidation range. Which
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would be more visible on a
lower time frame. Because we
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have four candles here. So I'll
just zoom in. We have this one.
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One, two, three and four. Which
are moving sideways. You know
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consolidating and The next
candle is where the expansion
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happened which also broke
structure. So we pushed up
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forming a higher high and a
higher low and you can see we
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are we then start to form these
higher highs and higher lows.
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But if we take a look at this.
So these are the rules up here.
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So the demand zone. The area of
consolidation that comes before
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an impulsive move towards the
upside. So this is that
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consolidation before the
impulsive move to the upside
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which also broke structure this
high here. So, number two, we
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can take the low of the range
and the highest candle body or
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we can take the range price is
in as a whole. But if we look
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at taking the lower of the
range and the highest scale of
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00:10:51,128 --> 00:10:58,368
body This blue candle here
would be the low. Now why
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wouldn't it be this wick here?
Well this is the candle that
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actually showed the expansion.
This is the impulsive candle.
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So this is not the range. This
is the candle that broke out of
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that range. So this would be
the low. We take the lowest
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point which is the wick. And
the highest point we can look
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at would be Let me just get
that right. So the low, the
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wick, and the highest candle
body. So it's here. But as we
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also put here or we can take
the trading range as a whole
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00:11:36,968 --> 00:11:44,588
which is what I do personally.
So, for me would be the high.
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The highest point and then the
wick, the lowest point. And
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again, not taking into
consideration this wick because
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this is the candle that
actually broke with that
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expansion, okay? Impulsive
move. So this is our range
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free. Demand zone is created
once the expansion um takes
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place is what that's meant to
say. So you can see expansion
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takes place. Break structure.
This is the range. This is our
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demand. Price action will fall
into demand from the top side.
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Okay so this is the top side.
We fall back into the demand.
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Four, demand zones can be used
to enter longs as we learnt in
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a previous video. We can also
use them to close down any
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short positions that we may
have running as it's possible
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that we can see a reaction from
a demand. So, if we are in
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sales from here, we wanna be
thinking about, you know,
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setting targets or closing down
manually once we can look at
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how price reacts to the demand
level because you know it's
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likely we can see that reaction
and then for the push to the
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upside which is what we got
here so How could we go about
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entering this trade? Well, we
can set our entry at limit
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order
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the limit order is valid as
soon as we break here.
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The consolidation uh slash
order block uh range in market
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so we can set our entry at the
top now you can see here we had
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a week back down but we we
wouldn't have been tapped into
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the market because price then
pushed up made a new high. Now
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this week down was just to try
and rebalance any imbalance
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that was left here. But we also
left imbalance here. Um and
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00:14:20,168 --> 00:14:23,708
don't worry we're getting to
imbalances in a later video but
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that's what this was. We pushed
up higher higher and then we
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00:14:28,748 --> 00:14:34,068
come back down breaking these
lows. And we would have been
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triggered into the trade. Now
all of our stop losses. Well we
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00:14:41,028 --> 00:14:47,928
can place our stop loss at the
low of the trade and range or
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we can account for any wicks
that we may have. So, we got
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this wick here. So, we can put
our stop loss at that wick or
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just below it. Because price
can come down to mitigate the
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entire sort of trading range
and any imbalance or
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inefficiency that was left on
this impulsive move. Before
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then continuing. So, if we put
our stop loss directly at this
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00:15:17,428 --> 00:15:23,008
sort of block or trading range
then it's likely we can be
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00:15:23,008 --> 00:15:28,948
tapped out with a wick before
price continues. So giving
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00:15:28,948 --> 00:15:34,508
yourself that one to two pip
sort of buffer accounting for
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00:15:34,508 --> 00:15:41,708
the wick you know it's a lot
safer to do so. But that's the
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example of a demand where we're
looking at expansion and
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consolidation and how we can
look to enter it. But let's now
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get into a example of supply
and so example. Okay so now
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we've got a example of a
supplier. We are on GBP USD on
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00:16:06,068 --> 00:16:12,948
the hourly time frame. So let's
get into this example. So what
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00:16:12,948 --> 00:16:16,968
we can see is price was put in
these high highs and these high
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00:16:16,968 --> 00:16:23,268
lows. So high high. High high.
Higher higher, low, higher,
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00:16:23,268 --> 00:16:28,128
high, higher, low, higher,
high, okay? Corrective price
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00:16:28,128 --> 00:16:34,788
action which is efficient. So,
all of these moves are, you
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00:16:34,788 --> 00:16:38,148
know, we're we're making highs,
retracing, with mitigating,
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00:16:38,148 --> 00:16:41,208
making highs, retracing,
mitigating, and then
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00:16:41,208 --> 00:16:46,488
continuing. So now, when we
look at here, you can see we
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had an impulsive move to the
downside which is the
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expansion. You can see it's a
and if you compare this move to
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this entire move. You can see
it's the same length and you
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00:17:04,808 --> 00:17:09,848
can see the difference in the
candle size. We have we do have
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00:17:09,848 --> 00:17:14,408
some candles within this like
these two here but 80% of this
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00:17:14,408 --> 00:17:23,548
move here is corrective and
this is impulsive. Okay, So
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this is the expansion phase. We
also broke structure to the
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00:17:26,728 --> 00:17:32,668
downside. So we broke structure
here and here. So let's look at
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00:17:32,668 --> 00:17:36,868
our rules. So number one the
area of consolidation that
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00:17:36,868 --> 00:17:42,028
comes before an impulsive move
towards the downside. Which is
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00:17:42,028 --> 00:17:45,268
bearish price action. So this
is that bearish price action.
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00:17:45,268 --> 00:17:50,128
Where's the range that come
before this? Well this is here.
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00:17:50,128 --> 00:17:56,628
So Price made this higher high
here above this high. We then
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00:17:56,628 --> 00:18:03,548
had a higher low. Price then
wicked that higher. But it
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00:18:03,548 --> 00:18:08,528
failed to break above and put
in that new hire. And instead
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00:18:08,528 --> 00:18:13,948
we got two wicks and we sort of
you know we losing that
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00:18:13,948 --> 00:18:17,248
momentum you can see prices
failing to continue going up.
200
00:18:17,248 --> 00:18:21,208
We get a bit of a range. Range
found market and then we
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00:18:21,208 --> 00:18:28,108
initiate out. Number two, we
take the high of the range and
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00:18:28,108 --> 00:18:33,588
the lowest candle body. Or we
can take that trading range as
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a whole. Okay? So if we just
zoom in where's the higher?
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00:18:39,828 --> 00:18:44,288
Well where does where does the
range start? Well This is
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pushing up. This move here is
the move that broke this high.
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00:18:49,568 --> 00:18:52,628
Okay so that's not a range
really. It's corrective but
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00:18:52,628 --> 00:18:57,128
it's not a range. This is more
of a range. And I would be
208
00:18:57,128 --> 00:19:03,808
looking at you know from you
you could say from here this
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00:19:03,808 --> 00:19:07,108
from this candle or this
bearish candle all the way
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00:19:07,108 --> 00:19:12,268
until you know we initiate out
with the expansion so we take
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00:19:12,268 --> 00:19:15,928
the higher of the range as you
can see I put on the higher
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00:19:15,928 --> 00:19:21,028
this is the highest point which
is this wick and the lowest
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00:19:21,028 --> 00:19:24,628
body. So let me just put on the
lowest body as it's not on
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00:19:24,628 --> 00:19:27,168
there just yet.
215
00:19:28,568 --> 00:19:34,148
Let me just move that to the
back. Okay so where's the
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00:19:34,148 --> 00:19:39,968
lowest body? Well you could say
this candle but this is when
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00:19:39,968 --> 00:19:47,408
momentum started to come into
the market and then did come
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00:19:47,408 --> 00:19:50,648
in. So this this candle here is
the same as these candles. So I
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wouldn't be looking at that.
I'll be looking at the next
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00:19:52,988 --> 00:19:55,348
one.
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Which is here. So this is the
lowest candle body. These two
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candles. So this grey one and
the blue one they're both the
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same so we can use both of
these. So we've got the lowest
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um candle body. As the the
lower the range and the higher
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the range are the wicks. But as
I've said already I take the
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overall range the low to the
higher. So I'm gonna put it
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back to where I have it. Have
it here. I will take this low
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here and the higher. Because we
then initiate out with the
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expansion which come after the
consolidation range bound
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market. So Number three. Supply
zone is created once the
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expansion forms. So we've we've
gathered that. The expansion is
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00:20:48,828 --> 00:20:54,888
here. This then confirms this
as our supply. And our
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00:20:54,888 --> 00:21:01,728
consolidation slash range bound
market. Price pushed in. Price
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00:21:01,728 --> 00:21:08,728
action will fall into a supply.
Price action will push up into
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00:21:08,728 --> 00:21:13,528
the supply from the downside.
So you can see if we push back
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00:21:13,528 --> 00:21:21,528
up And this is also this move
here. Is also rebalancing
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inefficiency as I'm marking on
now any liquidity or imbalance
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00:21:30,748 --> 00:21:34,468
that was left on this large
move is being rebalanced before
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large banks are continuing the
price okay? It's number four.
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00:21:43,588 --> 00:21:54,408
Okay so I need to change this.
That says demand. Supply.
241
00:21:55,068 --> 00:22:01,328
And this bit here. So supply
zones can be used to enter
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00:22:01,328 --> 00:22:08,188
shorts. Supply zones can be
used to enter shorts. We can
243
00:22:08,188 --> 00:22:15,908
also use them to close down any
long positions. Long, not
244
00:22:15,908 --> 00:22:20,048
short, okay? So again, just if
you're a bit confused because I
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00:22:20,048 --> 00:22:23,528
didn't update this. Supply
zones can be used to enter
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00:22:23,528 --> 00:22:29,708
shorts as we push back into it.
We can also use them to close
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00:22:29,708 --> 00:22:37,988
down any of our long positions.
Now you if I just go through
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00:22:37,988 --> 00:22:44,088
something very key here. We
push down which is expansion
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00:22:44,088 --> 00:22:51,568
that came after consolidation
but what do we tap into here?
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00:22:51,568 --> 00:22:57,068
Well I've got it marked on. So
if we look left what is this?
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00:22:57,068 --> 00:23:00,608
Or it's a it's a demand zone
right? Because we've expanded
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up from a range.
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So, if once we see price come
down you know we can look for
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00:23:13,408 --> 00:23:19,648
longs from here because we've
tapped into a demand which also
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00:23:19,648 --> 00:23:26,728
left imbalance. And notice how
price has respected this area.
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00:23:26,728 --> 00:23:30,268
Even if I drag this out. Now
I've got this line on because
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00:23:30,268 --> 00:23:35,008
it's marking the halfway point.
Of the demand. Or this order
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00:23:35,008 --> 00:23:40,668
block. This is more so an order
block. This candle here. This
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00:23:40,668 --> 00:23:44,928
line is the equilibrium point
of the order block. So that
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00:23:44,928 --> 00:23:51,168
means it's the halfway point.
You can see price taps in. Now
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00:23:51,168 --> 00:23:55,788
the equilibrium gets respected
a lot um with these sort of
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00:23:55,788 --> 00:24:01,008
supply and demand levels. We
tap in. We push off. So if we
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00:24:01,008 --> 00:24:05,968
was looking for a long here
Let's just say we looking to
264
00:24:05,968 --> 00:24:10,228
get along here. Obviously I'm
not going down on lower time
265
00:24:10,228 --> 00:24:14,968
frames. I'm just showing you
the the concepts of supply and
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00:24:14,968 --> 00:24:18,928
demand. So our stop loss would
be just below. And we enter the
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00:24:18,928 --> 00:24:23,488
top. Now that we know we have
this supply up here. We can
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00:24:23,488 --> 00:24:29,468
target it. As it as it says
here. Okay. We can target sort
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00:24:29,468 --> 00:24:35,288
of the beginning or the base of
the supply and you can see how
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00:24:35,288 --> 00:24:40,928
how perfectly it played out.
Now this is a 4.3 R with a
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00:24:40,928 --> 00:24:44,288
twenty-six pip stop loss. Now
in lower time frames we can get
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00:24:44,288 --> 00:24:49,148
in with AA much tighter stop
loss than this but this is just
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00:24:49,148 --> 00:24:56,568
to show the concepts. So let me
tap in to the supply. And then
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00:24:56,568 --> 00:24:59,488
Bischof.
275
00:25:03,068 --> 00:25:08,368
Let me just delete this off.
And you you can see how price
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00:25:08,368 --> 00:25:14,068
has kept to this demand. We've
respected it. We actually
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00:25:14,068 --> 00:25:17,128
mitigate more than 50% here. So
we actually mitigate around
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00:25:17,128 --> 00:25:23,048
ninety percent. Before we then
continue. So I wouldn't be
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00:25:23,048 --> 00:25:26,708
surprised if we then push up a
little bit more and then we we
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00:25:26,708 --> 00:25:32,288
come down because this has been
mitigated now so we can
281
00:25:32,288 --> 00:25:36,028
actually come down. Large
282
00:25:36,568 --> 00:25:42,108
and pass this order block or
demand level. But if we just
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00:25:42,108 --> 00:25:46,368
focus back on the supply you
can see we come out expansion
284
00:25:46,368 --> 00:25:53,088
this comes after the
consolidation we come back up
285
00:25:53,088 --> 00:25:59,808
to rebalance we tap in so we
can set our entry at the the
286
00:25:59,808 --> 00:26:05,028
low of the the range we have
our stop loss again just above
287
00:26:05,028 --> 00:26:09,768
one to two pips above the high
of the range and the supply
288
00:26:09,768 --> 00:26:15,968
zone with the expect that we're
gonna tap in mitigate you know
289
00:26:15,968 --> 00:26:22,588
we could just tap tap in by a
couple pips or we could push up
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00:26:22,588 --> 00:26:28,548
higher right to the top of it
and then continue from here. In
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00:26:28,548 --> 00:26:35,748
this example you can see we tap
in by a couple pips and then we
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00:26:35,748 --> 00:26:42,048
respect the supply zone and
price is now rebalanced so we
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00:26:42,048 --> 00:26:47,508
can continue down and looking
looking for lower lows but also
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00:26:47,508 --> 00:26:52,548
understanding what we have here
okay this is why prices respect
295
00:26:52,548 --> 00:26:57,948
in this area you can see we tap
in once twice three times
296
00:26:57,948 --> 00:27:01,748
mitigate gate ninety percent.
Tap in again. And now it looks
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00:27:01,748 --> 00:27:08,848
like we're pushing off. This
could push up to another sort
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00:27:08,848 --> 00:27:14,248
of supply or a bearish order
block up here because this is
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00:27:14,248 --> 00:27:19,428
the last up move before the
down move broke structure. But
300
00:27:19,428 --> 00:27:23,748
that's all I wanted to cover
really on supply and demand. So
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00:27:23,748 --> 00:27:26,808
what we're gonna get into next
it's gonna be order blocks and
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00:27:26,808 --> 00:27:30,348
how we can go about trading
them. And then refining them
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00:27:30,348 --> 00:27:33,788
down on lower time frames.
28236
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