I've been studying price action for some time in an attempt to best make my market entries and improve my profit to loss ration
The lines you see are a revised version of the regression trend brought bout by ideas of Laurentiu Damir an Italian trader and the author of "Price Action Breakdown." I am not sponsored by him by any means but I highly encourage you to pick up his book! He takes his own version of the regression trend and breaks it down in terms of supply and demand. This idea has completely transformed the way I look at price and has given me an incredible tool to work with.
This understanding of supply and demand has given me a new definition of support and resistance and I have found this to work very well I conduction with my knowledge in harmonics, Elliot waves and previous price action knowledge. It has also allowed me to have a lower stop loss range understand where the supply and demand is within ranges.
The idea is simple: as supply increases (or moves towards the upper band between the orange and blue) I am in looking for sell opportunities or a break in the range if any of the resistance becomes pivotal resistance
Same idea on the low end: as price moves towards the lower band and demand increases I am looking for buy opportunity within the range of support.
*notice how I said zones*
Laurentiu's theory is to trade from one zone of supply or demand and trade to the fair price. However, I use this theory in conjunction with my own analysis and I trade to one zone of the other based on my chart structure and fib extension towards a major zone of support or resistance
The lines you see are a revised version of the regression trend brought bout by ideas of Laurentiu Damir an Italian trader and the author of "Price Action Breakdown." I am not sponsored by him by any means but I highly encourage you to pick up his book! He takes his own version of the regression trend and breaks it down in terms of supply and demand. This idea has completely transformed the way I look at price and has given me an incredible tool to work with.
- Orange High - Increased Supply
Orange Low - Increased Demand
Pink - "Fair Price" the price where price was most traded in the channel (or where buyers and sellers felt price was "fair")
Blue High - Price high of the channel
Blue Low - Price low of the channel
This understanding of supply and demand has given me a new definition of support and resistance and I have found this to work very well I conduction with my knowledge in harmonics, Elliot waves and previous price action knowledge. It has also allowed me to have a lower stop loss range understand where the supply and demand is within ranges.
The idea is simple: as supply increases (or moves towards the upper band between the orange and blue) I am in looking for sell opportunities or a break in the range if any of the resistance becomes pivotal resistance
Same idea on the low end: as price moves towards the lower band and demand increases I am looking for buy opportunity within the range of support.
*notice how I said zones*
Laurentiu's theory is to trade from one zone of supply or demand and trade to the fair price. However, I use this theory in conjunction with my own analysis and I trade to one zone of the other based on my chart structure and fib extension towards a major zone of support or resistance
Comment:
On my new charts I have renamed the high and lows of the channel (blue):
-supply extreme and demand extreme
-supply extreme and demand extreme
Notice how its called fair price and not "the middle"
In the regression trend price is a defined zone around the center of the trend.
In the modified version price is not necessarily centered. Sometimes this price will be in the lower or upper band of the range.