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A Beginner's Guide To Supply And Demand [ 2022 Updated ]

'supply and demand examples' In this blog i discuss about this, The markets either do one of two things: Price either consolidates or expands.
Fx Torikul

'Supply and Demand' In this blog i discuss about this, The markets either do one of two things: Price either consolidates or expands.

Supply and Demand

Consolidation and Expansion

The markets either do one of two things: Price either consolidates or expands.

Consolidation a period in the market where price is moving calm which moves in a range known as the dealing range. We will be able to identify a clear high and low to this range.

You have probably heard of the term range bound, ranging or consolidating. This means that price is typically staying in one area, and just moving sideways, rather than up or down.

The range can be tight (meaning a spread of only a few pounds), or the range can be loose (meaning a spread of hundreds of thousands of pounds from range high to low. This partly will come down to the timeframe implemented.

Expansion: a period in the market where price is moving aggressively in one direction or the other. We will see an impulsive move to the upside, or an impulsive move to the downside, where price will give us large candle bodies or wicks. This is known as expansion.

Some Supply and Demand examples:

Bullish Supply and Demand examples:

Bullish Supply and Demand

Bearish Supply and Demand examples:
Bearish Supply and Demand

Supply and Demand Theory:

Demand Zone: which is the area of consolidation that comes before an impulsive move towards the upside (bullish price action). So a demand zone is sometimes referred to as a bullish consolidation block. What we will usually see is a range-bound market, followed by bullish expansion.


Demand zones can act as support when price action drops down into them from the top side. Demand zones are used to enter longs and/or close short positions.


How to mark off our demand zones: we take the low of the range, and the highest candle body. Or, we can take that ranging price as a whole.


Supply and Demand Theory
Supply and Demand Theory



Supply and Demand Theory:

Supply Zone: which is the area of consolidation that comes before an impulsive move towards the down side (bearish price action). A supply zone is sometimes referred to as a bearish consolidation block. What we will usually see is a range-bound market, followed by bearish expansion.

Supply zones can act as resistance when price action pushes up into them from the down side. Supply zones are used to enter shorts and/or close long positions.

How to mark off our supply zones: we take the high of the range, and the lowest candle body. Or, we can take that ranging price as a whole.

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