SnD and SnR Trading Strategy
Page 1 of 5 12345 LastLast
Results 1 to 10 of 49

Thread: SnD and SnR Trading Strategy

  1. #1
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184

    SnD and SnR Trading Strategy

    Hello all, let me share material about how to trade using Supply/Demand (SnD) and Support/Resistance (SnR). Before practice, I will talk a lot about SnD and SnR concepts. Perhaps some of us have tried to learn about supply demand analysis in many sources, but until now we have difficulties to understand it and YES !!! that's what I feel too. But finally I found learning materials that make me feel easy in understanding supply demand analysis. One of them is learning from this forum, I found some threads about supply/demand in this forum, but I don't need to mention who is the author of those thread. I will only say thank you to him/her.

    What is Supply/Demand? What is Support/Resistance? You can get the answer from many sources, there are tons of sources you can find to learn Supply/Demand, and Support/Resistance.
    I don't need to talking about the definition of both, this is just pure my own mindset about Supply/Demand and Support/Resistance on forex technical analysis. If you think that my mindset about Supply/Demand and Support/Resistance is different from the others, you don't need to ask me again. Because this is really pure my own understanding of SnR and SnD. I have never read a book about Supply/Demand and Support/Resistance, but I know a little about the theories of both. And maybe I have a different understanding with the others for both.

    Relationship between Supply/Demand and Support/Resistance
    Do you ever think what is the difference of SnR and SnD in forex trading technically? Or maybe you have asked other traders what is the difference between SnR and SnD? Many traders say both are the same, or at least SnD and SnR are similar. And also many traders say that Support/Resistant is a level, while Supply/ Demand is an area. As seen in the picture below:

    2018-06-23_080914.jpg

    We see on the picture above, Red boxes is area of supply, Blue boxes is area of demand, Green lines as support levels, Yellow lines as resistance levels.

    Zone A and Zone B : According to economic theory, prices can only move due to an imbalance between Supply and Demand and no other cause. The basic principle causes the price to move down is, because there is a sale, then the supply in the market increases, and based on the law of economic balance, if supply increases, then the price will fall. If the price goes up, then it means there are many buyers so demand in the market increases.

    Then why do we make an area of supply/demand only near support/resistance levels? : Often when we watch the chart, the price just moves up/down to a certain point, then rebounds, then rises again, rebounds again, etc, like there is a wall at that price level. Why did it happen? Why are they selling/buying at that price? Why not at another price level?
    Support is a certain point where psychologically many people will buy the instrument, simply, where the price will rebound after it goes down.
    Resistance, is the opposite of support, a point where psychologically many people sell the instrument, simply, where the price will rebound after rising.
    Usually most of buyers/sellers enter the market near the support/resistance. However, that does not mean there is no buyers/sellers in zone A and B. In fact many traders also enter the market in zone A and B.

    Simple analogy :
    Supposing you want to hoard coconut oil. The price on January 1 is $ 1 per bottle. On January 3, the price rose to $ 1.2 per bottle. Of course you don't immediately buy at the price of $ 1.2 (unless forced or other reasons). You will wait for the price to fall slightly,. It turned out that on January 5, the price dropped to $ 1 again. So psychologically, you'll think .. well, it's down to the same level as January 1st, then you're thinking of buying at this price.

    This principle is more or less the same as what happens in forex. At a certain level (support), traders (both small and big) will think this price is good enough to buy.

    Every Banks, financial institution, etc. has a research team that estimates the value of support & resistance. There is no definite formula for calculating support, quite a lot of things that can be used as support, for example:
    - Figures round (0.20,50,80-for example EURUSD 1.2320, 1.2600, etc.) because most companies like to buy at round numbers
    - Lowest price since last x minutes, last x hours, last x days, etc.
    - From indicators such as moving averages, etc.
    - Order volume at a certain price.
    For resistance, then the reverse, the highest price since x minutes, hours, and so on.

    Well, the values ​​released by analysts and research teams are usually followed by many traders. The more that follow, the greater the effect on the price.

    For example, X analysts expect EURUSD support at 1.2500, so if many read and follow, there will be a lot of buy at 1.2500 which makes the price hard to break.

    Support & Resistance is just information, not a trend, more helpful, where we should start to enter the market, or where we should get out of the market.

    For trend analysis, we can use Technical Analysis or Fundamental, or both.

    Now I don't want to talk more about that, you can make definitions based on your own ideas and understanding, I won't take it seriously as long as your mindset doesn't deviate too far from those theory.

    Not allowed!

  2. #2
    Registered user
    Join Date
    Aug 2013
    Posts
    11,659
    Promo (¢)
    1,845
    Thumbs Up
    Received: 70
    Given: 48
    I think that both supply and demand , support and resistance levels are the same in function as both can form a levels or zones which the market respect and this help us to find the proper positions of trading, but actually it is hard to determine the supply or demand zones until the market break or pullback from them then we can start to determine them

    Not allowed!

  3. #3
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184
    Quote Originally Posted by sameeh View Post
    I think that both supply and demand , support and resistance levels are the same in function as both can form a levels or zones which the market respect and this help us to find the proper positions of trading, but actually it is hard to determine the supply or demand zones until the market break or pullback from them then we can start to determine them
    Yes you're right, basically support/resistance level is often used as a reference by market participants to enter the market, when many buyers who want to buy in the support area then the demand will increase. And when many sellers are selling in resistant areas then supply will increase. This applies technically beyond the fundamental situation affecting the market resulting a breakout and towards the saturation point which then finds a support/resistance level in the new high low. It's just a basic theory to make us understand in a simple trade law.

    UNDERSTANDING THE CONCEPT OF SND AND SNR WITH SIMPLE IMAGINATION

    To make it easier for us to understand this simple concept, we can create imagination, so that we understand this outside our heads, we can imagine a war between two royal camps, namely buyers and sellers, Support is the wall of the buyers, and the resistance is the wall the sellers.

    Kingdom of Sellers and Seller's Royal Wall
    maxresdefault.jpg
    The seller's defense army guard the wall so as not to be easily penetrated by the army of buyers. Usually the army retains the royal wall as best as possible so as not to be break and penetrated by the opponent, the royal wall is always used as a symbol of defense, if the wall is penetrated, then the kingdom decline or collapse. Therefore, the area of the royal wall is the focus to be maintained, so a lot of soldiers who stay in this area to defend the wall.

    ggg.jpg
    The seller's royal wall is being attacked by the buyer's royal army, The seller's royal defense army was unable to withstand major attacks from the buyer's royal army, so some of them died, and many of them left the seller's royal defense area wall, they ran into the second defense wall area of the seller's empire. Then seller's royal wall has been broken easily by the buyer's army, as the soldier of the seller's empire has left this area. And then the buyer's army headed for the second wall of the sellers' empire, a lot of soldiers from the seller's empire waiting in the second wall defense area, here the defense is getting stronger as more soldiers from the seller's empire maintain this area.

    Now we change the term from the above story
    maxresdefault.jpg
    Sellers protect the resistance level so as not to be easily penetrated by the buyers. Usually the sellers retains the resistance level as best as possible so as not to be break and penetrated by the buyers, the resistance level is always used as a symbol of defense, if the resistance level is penetrated, then the sellers will move and waiting at the second resistance level. Therefore, the demand area is the focus to be maintained, so a lot of soldiers who stay in this area to defend the resistance level.

    ggg.jpg
    The resistance level has been broken by the buyers The sellers was unable to withstand big pressure from the buyers, many of them left this resistance level, they ran into the second resistance level. Then the first resistance level has been broken easily by the buyers, as the sellers has left this area (supply area). And then the buyers headed for the second resistance level, a lot of sellers waiting in the second resistance level, here the defense is getting stronger as more sellers maintain this area.

    In conclusion, from the above story can be concluded that:

    Support/Resistance is just a level that is used as a reference for entry and exit the market, both are the level of defense, many traders enter the market near the support/resistance level, so called the area of supply/demand. There is a lot of support/resistance levels as the area of defense, if "support 1/resistance 1" has been broken, then buyers/sellers will use "support 2/resistance 2" as a new level.

    Not allowed!
    Last edited by ara; 06-28-2018 at 12:18 PM. Reason: reattach image

  4. #4
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184
    Market Chart

    Now I paint the imagination in the previous post into the market chart.

    STAGE 1
    a1.png

    Arrow 1 : Buyers attack, can't destroy the sellers wall.
    Arrow 2 : Sellers attack, Buyers retreat, but can't destroy the buyers wall.
    Arrow 3 : Buyers attack. destroy the sellers wall, the wall has been collapse and buyers attack to 2nd sellers wall. The sellers move to 2nd sellers wall, and the buyers build a new buyers wall.
    Arrow 4 : Sellers attack, destroy the buyers wall, the buyers move to the initial wall again, and the sellers build a new wall again in the old area.

    STAGE 2
    a2.jpg

    The war zone is getting narrower as sellers build 2 new walls.

    Now we change all the terms
    STAGE 1
    b1.png

    Arrow 1 : Demand pressure, but bouncing from resistance
    Arrow 2 : Supply pressure, Buyers retreat, but bouncing from support
    Arrow 3 : Demand pressure. break out of resistance level, demand pressure towards 2nd resistance level. The sellers move to 2nd resistance level, and the buyers create a new support level.
    Arrow 4 : Supply pressure, break out of new support level, the buyers move to the initial support again, and the sellers create new resistance level again in the old resistance area.

    STAGE 2
    b2.jpg

    The trades zone is getting narrower as sellers create 2 new resistance levels.

    Not allowed!

  5. #5
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184
    In this article, I will use various terms in reading the market chart as you see in the image below :

    b2.jpg

    New Support/Resistance Levels

    From the picture above, we can see how sellers create a new level resistance (not the past resistance level, not the past broken support level, not the past high price).
    Sellers try to push support level with strong support pressure, make narrow space of trade zones by building 2 new resistance levels.

    As I discussed earlier, I am imagining the two kingdoms. Kingdom of Buyers and Kingdom of Sellers.
    Now I will take a game of chess as an example.

    f203c138d474e59d5796d33b5f36ddf3.jpg

    As I wrote in the picture, Rook is the defense wall. It mean that Rook is Support / Resistance Level.
    Rook has two capabilities in protecting the chessboard area: horizontal plot and vertical plot.
    However I will only take the vertical plot.

    See the image below :

    screen-0.jpg

    In the picture above, the rook is a defensive wall or support/resistance levels. If the rook dies, then the defensive wall is missing.

    screen-0.jpg

    In the picture above, we can see how the sellers bulid a new resistance level.

    Not allowed!

  6. #6
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184
    Trade Zone
    Just like in the game of chess:

    standardboard.jpg

    Chart image :

    2018-07-03_082408.jpg

    Yellow box as trade zone. An area between the nearest support/resistance that becomes the trading zone where traders especially retail traders enter the market in this area. The wider the volume of the trade zone the stronger the impulse of supply/demand, especially this happens when big players enter the market.

    Strong Supply/Demand Pressure

    standardboard.jpg

    2018-07-03_084621.png
    There is an increase power of supply/demand that produces big pressure on the support/resistance level and can break those support/resistance level.

    Strong Support/Resistance Level
    Is a support/resistance level which is difficult to be penetrated by the pressure of supply/demand within a certain time, can even be a trend reversal point.

    2018-07-03_085249.png

    Not allowed!

  7. #7
    Registered user
    Join Date
    Nov 2016
    Posts
    3,296
    Promo (¢)
    1,770
    Thumbs Up
    Received: 11
    Given: 5
    This is a great presentation on supply and demand , which you have broken down into bits using some very great graphs to illustrate your point. As a matter of fact, the first thing that i did after going through the thread was to bookmark it so that i can come back to read it much later when i am a little busy. The message that you have taken time to present here is not something that a trader should just go through once and close the chart. It is one that must be given some good attention to because a lot of salient points were presented here. You are a genius ara and well done for this.

    Not allowed!

  8. #8
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184
    Quote Originally Posted by ORACLE OF GOD View Post
    This is a great presentation on supply and demand , which you have broken down into bits using some very great graphs to illustrate your point. As a matter of fact, the first thing that i did after going through the thread was to bookmark it so that i can come back to read it much later when i am a little busy. The message that you have taken time to present here is not something that a trader should just go through once and close the chart. It is one that must be given some good attention to because a lot of salient points were presented here. You are a genius ara and well done for this.
    Hello mate, thank you for your visit and appreciation, this is a presentation based only on my understanding of SnR and SnD, this is an educational material especially for me personally and for all members and also this forum visitor generally, here we study together.

    Back to the topic

    Different types of SnR and SnD based on market chart patterns

    I've divided SnD and SnR into 4 types based on the shape and the market pattern.
    Note : Red Line as SnR, Blue Box as SnD

    1. Sideway



    SnD and SnR shaped horizontal

    2. Trend

    Of course we already know that there are 2 types of trend patterns.
    - Bullish



    SnR and SnD shaped slash / upward from bottom to top

    - Bearish



    SnR and SnD shaped slash / downward from top to bottom

    3. Triangle

    There are 3 types of triangle patterns,

    - Symmetrical triangle



    Support and Demand shaped upward from bottom to top
    Resistance and Supply shaped downward from top to bottom

    - Ascending triangle



    Support and Demand shaped upward from bottom to top
    Resistance and Supply shaped horizontal

    - Descending triangle



    Support and Demand shaped horizontal
    Resistance and Supply shaped downward from top to bottom

    Inverted Triangle

    There are 3 types of inverted triangle patterns,

    - Inverted Symmetrical triangle



    Support and Demand shaped downward from top to bottom
    Resistance and Supply shaped upward from bottom to top

    - Inverted Ascending triangle



    Support and Demand shaped downward from top to bottom
    Resistance and Supply shaped horizontal

    - Inverted Descending triangle



    Support and Demand shaped horizontal
    Resistance and Supply shaped upward from bottom to top

    Not allowed!

  9. #9
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184
    Creating a simple scenario

    Well, now I'm going to make a simple scenario for market analysis, of course the basis of the scenario is with the various market patterns I've mentioned in the previous post. I painted charts with many lines making it easy to decide where the price will go next. So we can follow where the market direction based on breakout lines.



    I create a pattern in every phase in the market, we can create a scenario based on that pattern, if the price breaks out of the line (support / resistance), it will form a new pattern and of course will generate new support/resistance based on the pattern that will form next.

    I made 7 patterns in the image above :

    1. sideway
    2. ascending triangle
    3. bullish trend
    4. descending triangle
    5. sideway
    6. bullish trend
    7. sideway

    Not allowed!

  10. #10
    Registered user ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,836
    Promo (¢)
    0
    Thumbs Up
    Received: 105
    Given: 184
    Minor patterns in Major patterns

    After I painted some market patterns in the chart (previous post), now I will paint again about minor patterns inside the major patterns.

    Minor patterns are chart patterns in lower time frames, major patterns are chart patterns in higher time frames.



    If we use daily chart, then the minor pattern can be shown in hourly or minutes charts.
    Sometimes if we see a trend in lower time frames, but if we switch to higher time frames, the pattern is in a retracement of a trend phase.

    Not allowed!

Page 1 of 5 12345 LastLast

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •