Original subtitles

Hey everyone. Hope you're all doing well. Welcome to the

video. So we're gonna go through supply and demand the

theory. Um exactly what it is. Because our strategy sort of it

revolves around supply and demand you know order blocks et

cetera. So it's definitely important to know exactly what

it is. We're also getting to um consolidation and expansion. Um

we start with that and then we go from there. So, If we start

on the left here, the markets either do one of two things. So

price either consolidates or expands. Now if you come from

previous strategies er you may know this as impulsive

correction. So the correction would be the consolidation

phase. And the impulsive phase is known as the expansion. So

starting on consolidation this is a period in a market where

price is moving calm. Which moves in a range known as the

dealing range. Now we will be able to identify clear height

and low to this range. So you've probably heard of the

term range bound or ranging or consolidating. This means that

price is typically staying in one area and just moving

sideways rather than moving up or down. So again a range bound

market means that price is typically staying in one area

er with sideways price action rather than in one direction up

or down. Now this range can be tight meaning a spread of only

a few pounds or dollars or the range can be loose meaning a

spread of hundreds of thousands of pounds or dollars. From that

that range higher to the range low. Now this will partly come

down to the time frame that someone is implementing. Now

usually the lower the time frame the tighter the spread.

Meaning it can be a few pounds or dollars. And the higher the

time frame the looser the spread meaning the more money

basically. So it could be thousands, hundreds of

thousands. Um again uh consolidation is a state in the

market where prices moving calm and ranging. Or you know range

bound it's just sideways price action and if we look at this

diagram down here you can see this is this would be our

consolidation phase where price is moving sideways so you can

see going up down up down sideways price we aren't moving

you know in one direction so moving into expansion this is a

period in the market where price is moving aggressively in

one direction or the other. So we will we will see an

impulsive move to the upside or downside. Where price will give

us large candle bodies or wicks As you can see here, we had a

large impulsive move up. This is this is expansion. So we

will see large candles or large wicks um in one direction over

the other. So that's basically consolidation and expansion.

Slash impulse and correction. Now what we're gonna do is get

into supply and demand. Starting on demand zones. Okay.

So demand zones this is an area of consolidation. That comes

before an impulsive move towards the upside. IE bullish

price action. So this is our demand zone. Was im

so das ist

So what we will usually see is a range bound market followed

by a bullish expansion. So exactly this. Range bound

market slash consolidation followed by an impulsive move.

Which is then creating this bullish consolidation block. Um

and this is the expansion up.

This demand zone can act as support when price when price

action drops down into them. So once we push up here this could

be known as support but we know it as you know order blocks or

you know, consolidation, demand zones, price can can fall back

into them to enter longs and close short positions. So

again, demand zones can act as support when price action drops

down into them from the top side. Demand zones are used to

enter longs. So once price comes back into them we can

enter longs and or close short positions. Okay? So how to mark

off demand zones? Well we take the the low of the range and

the highest candle body or we can take the actual trading

range as a whole. So this would be our range. We can take this

but we would have you know all the blocks within this range.

As we get into. But this is just a theory. So consolidation

range bound expansion up I This can act as support as our

demand zone for price to come back into so we can enter longs

and or close you know short positions. So supply and demand

supply zones okay? This is an area of consolidation that

comes before an impulsive move towards the downside. As you

can see from this example which would be bearish price action.

So this is the bearish price action we would see. Which

breaks out of this consolidation phase. A supply

zone is sometimes referred to as a bearish consolidation

block. So what we will usually see is a range by market

followed by a bearish expansion. Range bar market

bearish expansion down. Breaking out of this

consolidation. Now supply zones can act as resistance when

price action pushes up into them from the downside. So once

we broke here price pushed back up into supply zone and this

can be used to enter shorts and or close long positions. So if

we're if we're looking down here we may have something to

the left IE a demand zone that we can trade long back into so

we can target you know the the supply zone. And then look for

shorts from this area. So how to mark off supply zones? We

take the higher of the range to the highest point which would

be you know the wick. And the lowest candle body. Which would

be the lowest bodies and not not the wicks the actual body

the lowest part of that range but what I what I like to do is

just take that that trading range as a whole so the high

and the low but in some examples if we've got you know

a huge wick then we can use our initiative and take the the

candle body and just look to see where the actual range is

and you know not account for that week.

So now we've got an example of a demand zone. We got a

expansion up which came after a consolidation slash a range

bound market and price then came back into it so if we just

take a look at this example

had this range here. So this is our consolidation range. Which

would be more visible on a lower time frame. Because we

have four candles here. So I'll just zoom in. We have this one.

One, two, three and four. Which are moving sideways. You know

consolidating and The next candle is where the expansion

happened which also broke structure. So we pushed up

forming a higher high and a higher low and you can see we

are we then start to form these higher highs and higher lows.

But if we take a look at this. So these are the rules up here.

So the demand zone. The area of consolidation that comes before

an impulsive move towards the upside. So this is that

consolidation before the impulsive move to the upside

which also broke structure this high here. So, number two, we

can take the low of the range and the highest candle body or

we can take the range price is in as a whole. But if we look

at taking the lower of the range and the highest scale of

body This blue candle here would be the low. Now why

wouldn't it be this wick here? Well this is the candle that

actually showed the expansion. This is the impulsive candle.

So this is not the range. This is the candle that broke out of

that range. So this would be the low. We take the lowest

point which is the wick. And the highest point we can look

at would be Let me just get that right. So the low, the

wick, and the highest candle body. So it's here. But as we

also put here or we can take the trading range as a whole

which is what I do personally. So, for me would be the high.

The highest point and then the wick, the lowest point. And

again, not taking into consideration this wick because

this is the candle that actually broke with that

expansion, okay? Impulsive move. So this is our range

free. Demand zone is created once the expansion um takes

place is what that's meant to say. So you can see expansion

takes place. Break structure. This is the range. This is our

demand. Price action will fall into demand from the top side.

Okay so this is the top side. We fall back into the demand.

Four, demand zones can be used to enter longs as we learnt in

a previous video. We can also use them to close down any

short positions that we may have running as it's possible

that we can see a reaction from a demand. So, if we are in

sales from here, we wanna be thinking about, you know,

setting targets or closing down manually once we can look at

how price reacts to the demand level because you know it's

likely we can see that reaction and then for the push to the

upside which is what we got here so How could we go about

entering this trade? Well, we can set our entry at limit

order

the limit order is valid as soon as we break here.

The consolidation uh slash order block uh range in market

so we can set our entry at the top now you can see here we had

a week back down but we we wouldn't have been tapped into

the market because price then pushed up made a new high. Now

this week down was just to try and rebalance any imbalance

that was left here. But we also left imbalance here. Um and

don't worry we're getting to imbalances in a later video but

that's what this was. We pushed up higher higher and then we

come back down breaking these lows. And we would have been

triggered into the trade. Now all of our stop losses. Well we

can place our stop loss at the low of the trade and range or

we can account for any wicks that we may have. So, we got

this wick here. So, we can put our stop loss at that wick or

just below it. Because price can come down to mitigate the

entire sort of trading range and any imbalance or

inefficiency that was left on this impulsive move. Before

then continuing. So, if we put our stop loss directly at this

sort of block or trading range then it's likely we can be

tapped out with a wick before price continues. So giving

yourself that one to two pip sort of buffer accounting for

the wick you know it's a lot safer to do so. But that's the

example of a demand where we're looking at expansion and

consolidation and how we can look to enter it. But let's now

get into a example of supply and so example. Okay so now

we've got a example of a supplier. We are on GBP USD on

the hourly time frame. So let's get into this example. So what

we can see is price was put in these high highs and these high

lows. So high high. High high. Higher higher, low, higher,

high, higher, low, higher, high, okay? Corrective price

action which is efficient. So, all of these moves are, you

know, we're we're making highs, retracing, with mitigating,

making highs, retracing, mitigating, and then

continuing. So now, when we look at here, you can see we

had an impulsive move to the downside which is the

expansion. You can see it's a and if you compare this move to

this entire move. You can see it's the same length and you

can see the difference in the candle size. We have we do have

some candles within this like these two here but 80% of this

move here is corrective and this is impulsive. Okay, So

this is the expansion phase. We also broke structure to the

downside. So we broke structure here and here. So let's look at

our rules. So number one the area of consolidation that

comes before an impulsive move towards the downside. Which is

bearish price action. So this is that bearish price action.

Where's the range that come before this? Well this is here.

So Price made this higher high here above this high. We then

had a higher low. Price then wicked that higher. But it

failed to break above and put in that new hire. And instead

we got two wicks and we sort of you know we losing that

momentum you can see prices failing to continue going up.

We get a bit of a range. Range found market and then we

initiate out. Number two, we take the high of the range and

the lowest candle body. Or we can take that trading range as

a whole. Okay? So if we just zoom in where's the higher?

Well where does where does the range start? Well This is

pushing up. This move here is the move that broke this high.

Okay so that's not a range really. It's corrective but

it's not a range. This is more of a range. And I would be

looking at you know from you you could say from here this

from this candle or this bearish candle all the way

until you know we initiate out with the expansion so we take

the higher of the range as you can see I put on the higher

this is the highest point which is this wick and the lowest

body. So let me just put on the lowest body as it's not on

there just yet.

Let me just move that to the back. Okay so where's the

lowest body? Well you could say this candle but this is when

momentum started to come into the market and then did come

in. So this this candle here is the same as these candles. So I

wouldn't be looking at that. I'll be looking at the next

one.

Which is here. So this is the lowest candle body. These two

candles. So this grey one and the blue one they're both the

same so we can use both of these. So we've got the lowest

um candle body. As the the lower the range and the higher

the range are the wicks. But as I've said already I take the

overall range the low to the higher. So I'm gonna put it

back to where I have it. Have it here. I will take this low

here and the higher. Because we then initiate out with the

expansion which come after the consolidation range bound

market. So Number three. Supply zone is created once the

expansion forms. So we've we've gathered that. The expansion is

here. This then confirms this as our supply. And our

consolidation slash range bound market. Price pushed in. Price

action will fall into a supply. Price action will push up into

the supply from the downside. So you can see if we push back

up And this is also this move here. Is also rebalancing

inefficiency as I'm marking on now any liquidity or imbalance

that was left on this large move is being rebalanced before

large banks are continuing the price okay? It's number four.

Okay so I need to change this. That says demand. Supply.

And this bit here. So supply zones can be used to enter

shorts. Supply zones can be used to enter shorts. We can

also use them to close down any long positions. Long, not

short, okay? So again, just if you're a bit confused because I

didn't update this. Supply zones can be used to enter

shorts as we push back into it. We can also use them to close

down any of our long positions. Now you if I just go through

something very key here. We push down which is expansion

that came after consolidation but what do we tap into here?

Well I've got it marked on. So if we look left what is this?

Or it's a it's a demand zone right? Because we've expanded

up from a range.

So, if once we see price come down you know we can look for

longs from here because we've tapped into a demand which also

left imbalance. And notice how price has respected this area.

Even if I drag this out. Now I've got this line on because

it's marking the halfway point. Of the demand. Or this order

block. This is more so an order block. This candle here. This

line is the equilibrium point of the order block. So that

means it's the halfway point. You can see price taps in. Now

the equilibrium gets respected a lot um with these sort of

supply and demand levels. We tap in. We push off. So if we

was looking for a long here Let's just say we looking to

get along here. Obviously I'm not going down on lower time

frames. I'm just showing you the the concepts of supply and

demand. So our stop loss would be just below. And we enter the

top. Now that we know we have this supply up here. We can

target it. As it as it says here. Okay. We can target sort

of the beginning or the base of the supply and you can see how

how perfectly it played out. Now this is a 4.3 R with a

twenty-six pip stop loss. Now in lower time frames we can get

in with AA much tighter stop loss than this but this is just

to show the concepts. So let me tap in to the supply. And then

Bischof.

Let me just delete this off. And you you can see how price

has kept to this demand. We've respected it. We actually

mitigate more than 50% here. So we actually mitigate around

ninety percent. Before we then continue. So I wouldn't be

surprised if we then push up a little bit more and then we we

come down because this has been mitigated now so we can

actually come down. Large

and pass this order block or demand level. But if we just

focus back on the supply you can see we come out expansion

this comes after the consolidation we come back up

to rebalance we tap in so we can set our entry at the the

low of the the range we have our stop loss again just above

one to two pips above the high of the range and the supply

zone with the expect that we're gonna tap in mitigate you know

we could just tap tap in by a couple pips or we could push up

higher right to the top of it and then continue from here. In

this example you can see we tap in by a couple pips and then we

respect the supply zone and price is now rebalanced so we

can continue down and looking looking for lower lows but also

understanding what we have here okay this is why prices respect

in this area you can see we tap in once twice three times

mitigate gate ninety percent. Tap in again. And now it looks

like we're pushing off. This could push up to another sort

of supply or a bearish order block up here because this is

the last up move before the down move broke structure. But

that's all I wanted to cover really on supply and demand. So

what we're gonna get into next it's gonna be order blocks and

how we can go about trading them. And then refining them

down on lower time frames.