GBPJPY Supply & Demand Short Trade Setup and Analysis

FX:GBPJPY   British Pound / Japanese Yen
We are currently in a good position for a high probability and high risk to reward trade setup. See charts for analysis.

I suggest to anyone that the wisest thing you will do is look here at the front of the chart for SD as the momentum is pushing the trend upward as in this particular case. SD is difficult to find on daily and larger Tf's. Not impossible, only difficult. Use the pivot highs and lows and smaller Tf's to find fresh SD zones to trade. Do so keeping in mind the larger, older Tf's SD way over on the left.
qFish JamesPowell
I also find "bases" in which the body is less than 60% of the candle range for supply/demand areas. Yes, HTF is harder to find and sometimes you gotta drill down a little lower. But the major ones in the HTF are more respected. Great analysis and tips.
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What I am offering is that in the case of this particular chart that the easiest money and bigger plays were from demand found in this particular leg upward. The more challenging trades were from Supply farther to the left.

I'm not debating your supply at the top of your chart at all. I am saying the momentum is pushing the trend upward and until that momentum slows and reverses that recent demand is generally a better bet than the older supply.

Having said that, if in fact the momentum does roll over up at the top of your chart then the opposite will begin to apply and then the supply that will be pushing price down will be the easier money than the older demand found in the already existing and circled leg up.
qFish JamesPowell
Momentum is definitely something I need to look into. Finding tops and bottoms is hard. RR is also not too great for Longs into resistance so waiting for weakness may be the safest play. But hard due to patience and need to be in a trade.
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It is hard. The laws and rules of the game make it very hard. I'll not go on a tangent about that but I will say that it is critical that momentum and trend be determined in order for anyone to even hope to have any success at this. The most relevant SD comes in on the right side of the chart. Gets digested and it is what has been digested that we see in the graphs to the left. We search through the graphs looking for the tiny Footprints of SD and just wager there is enough left there price reacts to it when it gets back to those levels. If you get in gear with the momentum and can afford to hold on long enough you will be correct. Just look at the S&P for what the last 6 years. Folks call tops in that monster every day.
JamesPowell JamesPowell
Please add a comment… Positive feedback and constructive criticism are important to authors and the community.
It is difficult, but not impossible. Study those charts from the biggest down to the tiniest timeframes. Don't ignore the left but pay more attention to the right. Like the example you made here. As soon as you realize price was going up you should have been salivating at the prospect of price pulling back and the chart tipping its hand telling you where to buy. We all should. The chart is very good at keeping its secrets. But sometimes it can't help but tip its hand. Study the charts and price action on the right side of the chart. If you don't see anything then don't pull the trigger. If you shoot at nothing and hit something I promise it was an accident. If you shoot at a target and miss that's just the business. If you really see something and you shoot and hit it. Thats success.

Conventional SD wisdom says look left for SD and expect that price has high probability of turning at that area. The notion is correct. But the freshness of the data has to be considered as well. The question always comes up in discussions of how far back do you look for SD? Invariably the answer is always as far back as is necessary to find fresh levels.

Imo, there is a limit to the life expectancy of any data to the left and the further left you look the less relative that data becomes. The data on the right side is naturally the freshest and the most reliable.
qFish JamesPowell
I agree. I assume a bounce from the fresh levels and indecision for those already used up more than once.
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qFish pampaq
Price making higher highs, CCI making lower highs, is this not Divergence? I'm still learning so help me see if I'm wrong. Thanks for input!
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