Trend trading with supply demand imbalance in any financial market

Wait for price retrace higher to a supply & sell again When location is too low, sell not allow.. Wait for price retrace higher to a supply & sell again Option 1 Price is too low on lo

By Bennybl www.bennybl.com

1 What is supply & demand

2 Only Four Trading Patterns to identify

3 How to identify and Draw supply demand

4 Two Elements to consider in Any Trade – Location & Structure

5 3 types of trade setup

6 What is Trend? How to define a Trend? How to draw trendline consistently? How do we

know trend ending?

7 How & when to trade Counter Trend (CT)

8 How to know market top /bottom

9 Supply/Demand in Control

10 Types of Trade Entry & When & How to use them

11 How to trade head & shoulder our way

12 How & When to trade Continue Pattern CP

13 What a Good Base should like

14 How to Validate Supply demand

15 Structure of trade

16 How to trade with Multiple Time Frames

17 Momentum breakout (MBO)

18 Secret In Trading

 When supply exceeds demand, there is going to be a turn

in price Price is driven down due to the quantity of goods produced & lack of demand for those goods being

produced.

 Price move down due to more sell orders than buy orders (imbalance between sellers & buyers) The price ranging before it drop, we call this zone as supply.

 We look to sell in the future when price retrace back to this supply(SZ)

 Reason: When there are strong imbalance, it also mean

there are “unfilled” sell orders at the supply

 When demand exceeds supply, there is going to be a turn

in price Price is driven up due to the quantity of goods

demand & lack of supply for those goods being demanded.

 Price move higher due to more buyers than sellers

(imbalance)

 The price raging before the rise, we call the zone

“demand” We look to buy in the future if price retrace back

to the demand

 Reason: Because of strong imbalance, there are unfilled buy orders at the demand waiting to be filled

(RP)

Rally-base-rally

(CP)

Rally-base-drop

 When there is only one candle that form the base That

single candle is the base

 When there are more than one candle form the base, any candlestick that has a body less than 50% of its range is part of the base

 When the candle’s body is less than 10%, L1 and L2 are

drawn on the top & bottom of the candle, otherwise, the L1

is drawn on the open/closed of the candle & L2 draw on the end of the candle

 In order to draw supply demand in a consistent way, we need to know the made up of supply & demand

◦ Supply demand always make up of two legs, first leg in and 2nd leg out

◦ 2nd leg is the key, we look for strong departure extended range candle (erc),

closing near its candle high

◦ Maximum 6 candles in the base No matter which timeframe

◦ When there are more than one candle, Tight candle bases with bodies <= 50% of the candle range are consider part of the base

DO NOT CONSIDER A BASE THAT:

Has only doji candles as a base

Has more than 6 candles

The candle closing price is stairsteps formation

Wicky candles

So many demands to choose which demands to long

To look for demand, we start from current price and look down and left until arrive a long

candle (ERC), then look to the base of the ERC, that is the demand.

L1

L1 L2

L1to place limit entryL2 to place stop loss

 For higher odds we want to buy low in the location and sell high in the location

 Questions: HOW HIGH IS HIGH IN THE LOCATION? HOW LOW

IS LOW?

 When Price is above 90% Long is no longer allow When

price is below 10%, Short is not allow On the other hand, when price is very low & near the demand, it’s the best

location to long This is the location trade

 We pay attention to the location in monthly, weekly and

daily

HTF supply

HTF demand

90%

HTF supply

HTF demand

10%

HTF (Monthly) Supply

HTF Monthly Demand

When location is too low, sell not allow Wait for price

retrace higher to a supply & sell again

When location is too low, sell not allow Wait for price

retrace higher to a supply & sell again

Option 1

Price is too low on location

Sell is not allow now Wait for

price to pullback higher to supply

supply

HTF Supply

we need to wait for HTF Demand removed, before we

continue look for selling opportunity

we need to wait for HTF Demand removed, before we

continue look for selling opportunity

Location too high, wait for supply removed and

continue look for demand to long Location too high, wait for supply removed and

continue look for demand to long

1. Trend trading = High odds

 Trend is series of price swings traveling in the same direction over time.

 By objectively assessing the trend, trader will then able to prepare

to take the next step

 Trader need to assess the strength of up trend in order to find

buying opportunity

 In up trend, traders look to put on new position or add on new

position on pullback to expected demand

 Once a trend established, it has greater odds of continuing than reversing If we accept this as true, then most profitable , lowest risk opportunity will come trading on pullback in the direction of a trend

 Trend can’t persist forever A downtrend evolve into up trend, & matured up trend evolve into down trend

Weekly supply

Weekly demand

D1 demand

D1 demandTrend trading

1. In up trend, demand must stay above up trend line In

down trend, supply must stay below down trend line

2. Location rules applied

3. When there are more than 3 continuation pattern (cp) in

trending market, 4th cp not allowed to take any more

Price is considered over-extended Once price retraced, it often has deep retracement

4. Always follow monthly/weekly trend

 Trendlines are easily recognizable lines that traders draw on

charts to connect a series of prices swing together The resulting line is then used to give the trader a good idea of the direction of the currency might move

 Downward sloping trendline suggest that there is an excess

amount of supply , a sign that market participants have a higher willingness to sell that currency, than to buy it

 an uptrend is a signal that the demand for the currency is greater than the supply, and is used to suggest that the price is likely to continue heading upward

 When there is a full candle closed below a up trendline or closed above a down trendline, the trend come to an end

How to Draw a Trend line & trendline

• Only rp to rp & not rp to cp.

• In up trend, price Must made a HH to validate the

swing low of that HH as one of the connecting swing low for drawing trendline

• In down trend, price Must made a LL to validate the

swing high of that LL as one of the connecting swing high for drawing trendline.

Trend Line Rules

• In a Up Trend, a valid demand zone should stay above

the trendline.

• Once there is a complete candle closed below trendline,

the demand should be negated until price approach the HTF demand.

• When there is a break of TL, supply demand not allow to

take until price arrive HTF sd Once trendline removed,

we need confirmation entry to get into any trade.

• There can be Only one trendline on each time frame

The latest trendline will over rule the previous trendline.

 in an uptrend or downtrend when the trend line is removed but

no opposing zone has been taken out, price in “no direction”

 Making Higher High(HH) and Higher Low(HL) does not

necessary mean market in Up Trend! In up trend, price must removed two supply, usually when two supply removed, we would have seen two rp to connect a up trend line If only one supply removed, market in no direction

 When a trend line is removed, the trend end

 When is trend line consider removed? When there is a full

candlestick either close above or below the trendline

Trending market become no direction

Weekly supply

Weekly demandLocation trade = counter trend

Trading with the bigger picture's trend is higher odds than trading counter-trend.

There are opportunity when price is over extended in one

direction, careful exam of the price action can allow trader to

participate Counter Trend (CT) trading opportunities

 Price must be at extreme! (min 3 CPs)

 The health of existing trend getting weak

 Price hit weekly/monthly SD and get rejected, REVERSAL

CANDLESTICK PATTERNS

 Look at price action to the left: price compression Compressed areas are easily absorbed

 Risk/Reward of 1:4 (in order to achieve 1:3)

 ONLY Trade SD WHICH ARE FRESH & ORIGIN

TL removed

Efficient swing

HHEntry time frame (ETF)

Buy limit hereHTF demand

Only Confirmation is allowed

once trendline removed Go to one

time frameLower than the CP detected for

confirmation entry

 Rejection candlestick = long wicks

 Institution’s manipulation

We often ask ourselves, why caused the candle to closed

here?

In a strong market, we often seldom see long wicks A long wick indicate either sellers enter market in an up trend, or

buyer enter market in a down trending market

In an up trending market, and the up trend has been in the trend for long time, when price come to near the top, we often see more rejection candles This tell us the bull is getting

weak and market might be coming to the top soon, but not reverse immediately

Buying climax

 After a substantial bull move taken place, the market moves even higher on Wide Spread candle Same time, good news

everywhere This is Buying Climax

 Climatic action is halled-marked by wide spread up but price does not respond upwards after the buying climax Buying climax often

is the high for the up trend It’s the level pro start to start taking profit

 The news will definitely be 'bad‘ Together with the pain of

previous falls will panic the herd into selling This will give

professional money the opportunity to buy into the market at

 In a bearish market when price has moved few hundreds to thousands of pips Most long traders has already loss money & position closed Coming to near the end of the down trend, there will be some long traders who refused to give up their long or

there are some traders thinking market should due for a reversal after a huge drop in price, so they add their long.

 Some long traders see the market is reversing also jump in to buy because they

think they are smart & want to out smart the market by buying low.

 Just when the price seen to slow down when approaching support, the big

institutions dump an big sell order & that sell order created a long bearish red

candle This ERC red candle “officially killed off” all the last hope traders who are still long.

 Looking at market drop another 100 pips beyond their support, these traders give up

& close their all long position When their long position closed, there is a transfer of money from these traders to the pro The novices lose & pro win again This is called

“shake-out” The pro shaking out the weak traders.

 But as SD trader, we look to the far extreme left & we know there is a demand, that

is the demand the pro is looking at to reverse the price back up 200 pips The

support resistance traders looking at support, SD trader look at supply demand to trade This is how the institution manipulate the market price knowing the weakness

of the common novice trader’s mindset, fear of losing the opportunity to make

money & greedy of wanting to make more money fast with short time

Market manipulation and how pro often end up winner in this zero sum game

Compressed demand easily get removed.

 Original-Level has been created out of the blue, not being a reaction to any previous level.

 We'll always use fresh levels on our

entry timeframe, never non-fresh

Price low on location

Weekly supply

Weekly demandD1 demand

Trend + location trade

 Trade taken in Entry timeframe(ETF) must be in the same direction of the higher time frame (HTF)

 Price to enter in ETF is located within htf demand

 Location rules must applied

 In up trend, demand must be above trendline In a down trend, in order to sell, supply must below

the down trendline

Weekly TF

In LTF H1, the entry long was triggered at H1 demand which

is within H4 demand, which is also within weekly demand

Location + trend setup

Why this is a “location+ trend setup?

•Trade in the HTF up trend

•The entry level is LOL HTD demand

 Price trending down and arrived the weekly demand zone and price hold at weekly demand and get rejected by weekly demand and start to move back higher We call this weekly demand in control.

 In up trend with demand in control, Don't trade against a zone in control until it's been clearly solidly broken.

 If D1 demand in control, price is in up trend in all time frame, D1 Supply

often get removed Price will only likely to reverse when it arrive HTF

(weekly /MN) Supply

 If D1 demand in control in an environment when weekly , Monthly in down trend We may sell the D1 CP supply with more than 50% in location, the

higher the better We prefer to sell rp supply located more than 50% in

location when demand in control.

 A CP pattern is considered in control ONLY IF the Trend line is intact Once the

TL is broken, CPs are can no longer be in control, we will have to lean on the

RP as areas in control

When supply in control, & price has not arrive demand (left picture below) , cp

is allowed Once the control moved from supply to demand in control, all CP

supply not allowed

When supply in control, & price has not arrive demand (left picture below) , cp

is allowed Once the control moved from supply to demand in control, all CP

supply not allowed

Entry #1 : Limit Entry

Limit Entry is install a

pending buy/sell limit on the

SD L1 before price even

L2

L2 sell Limit

Sell Limit

Price hit Supply & rejected

A brand new supply

Opposing demand

removed

Sell limit hereEntry #2 : Confirmation entry

Buy stop here

Stop loss

Pre-rbr

Entry #3 Momentum Breakout (MBO)

is to capture the initial breakout

Move This entry can be profitable but make sure trade in the direction

of trend

 When the SD is fresh, we use limit entry Entry time frame “Must”

always “fresh”

 In up trend,

Demand is above trend line, price retrace back to fresh demand.

1.If HTF timeframe SD zone not fresh

2.“Location” type of setup

3.Counter trend trade

4.When Trend line is removed

5.When the SD is too wide or level on level

6.When SD don’t look as convincing as you like to be

HTF Not Fresh, use Confirmation Entry

When htf is fresh, price do not need to make higher

high When htf is fresh, price do not need to make higher

high

When htf demand is not fresh, price need to made

higher high to remove opposing supply

When htf demand is not fresh, price need to made

higher high to remove opposing supply

D1 TF Do Not Have 1:2 To Validate Demand, Go to LTF…

If Missed First Long Entry, Price re-visit again with a brand new Demand created for another long setup

If Missed First Long Entry, Price re-visit again with a brand new Demand created for another long setup

Long triggered

D1 dz in green within weekly dz in beige

When HTf is fresh, price arrive for first time, confirmation entry need not made higher high When HTf is fresh, price arrive for first time, confirmation entry need not made higher high

The supply zone is too wide