Forex Supply and Demand Trading Strategy: Price Action - ForeXposed

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Tuesday, February 28, 2017

Forex Supply and Demand Trading Strategy: Price Action


  1. The price more often moves between all time high and all time low, and occasionally makes a new high/low.
Forex Supply and Demand Trading Strategy: Price Action
  1. Notice how the uptrend runs on the chart. After the price spike up with a strong momentum (blue line), the price will rest. Some people said this is consolidation area, sideway, correction; It's all true. But we can call it as a ‘rest area’, as a supply and demand zone which is buyer/seller accepts this area as new balance also called Price Acceptance Zone.
Forex Supply and Demand Trading Strategy: Price Action
  1. On the point A, people start thinking "price is already high enough”, or "prices rise too quickly". This psychological condition may take weeks until the buyer/seller "ACCEPT" the fact that this is a fair price level, reflecting the balance of demand and supply.
Forex Supply and Demand Trading Strategy: Price Action
  1. Once all parties viewed the fact that this is a price level acceptance, then a wave of buying happening again (red line) until it’s reaches next supply and demand area. This process happens over and over again. Imagine if this is not EU pair but oil price raised by the Government. Don't we need time to get used to the new price level? Of course, there will be protests here and there (the consolidation), but the main point is the new price levels have been created and settle until we can accept the fact that the living cost increases. After the psychological conditions subside (market sentiment), the Government could raise the price again ...:D
  1. Red and blue lines are known as Impulse Wave that shows the direction of the trend.