Knowing what a Supply/Demand (SD) is and knowing how to use them are different. Small writeup to provide clarity, to my perspective.
Small write up to cover:
- Improper use of SD
- Suggested Use of SD
- Conclusion
Improper use of SD, to my perspective.
Price always has an objective. When you have 2 swing points/liquidity pockets we are moving from one end to the other.
Mocking up SD levels between those 2 points will more then likely invalidate as price has decided it will engineer stops
Suggested use of SD levels, to my perspective.
Normally how I mark up SD areas are at the bottom of a range/bottom-top of liquidity points. As price taps demand/ runs a low we then move onto the next area of liquidity/supply invalidating all in-between.
Simple enough.
Conclusion:
Ask yourself what price is attracted too. If you know how to draw a certain level without context as to what the market is seeking this does not mean it will work and be applicable.
Knowing levels vs using judgement come into play.
Context is key.
End.//
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Wanted to briefly cover instances when I see traders get trapped within different variations as price consolidates and breaks down and how to potentially avoid.
We know the standard SFP-
Price sweeps a level and reverts to the opposing side.
What If we fail to sweep but close below an SFP?
This is when breakout traders come in and are trapped hence the manipulation cycle.
Notes on the Diagram Chart:
Potential Entries:
PO3's play a vital role when price breaks a key swing point. As long as we leave an opposing high any close below is a high probability we trap first and then go for the high second
Breakers offer good entry points for a broken low once we shift above
This is how Alts have played out the last few weeks to my perspective and currently.
1. Initial drive up (get people bullish) 2. Sell off into HTF Demand (Sentiment flips bearish) 3. Price gets back above with trapped funds in lock.
Examples attached.
2/4
When you see price move up early in the week and sentiment favoring a certain side its good to zoom out and mark out your untested HTF Demands as we might be engineering liquidity.
Postions build up, market participants chopped within a short term accumulation.
Notes on the chart:
2. Distribution into breakout traders
Breakout traders expecting another leg up are lured into filling the remaining shorts Market Makers might have. Market participants provide liquidity to the market.