The concept of supply and demand is at the core of all trends, resistance areas and price turning points. Here is how the basic understanding of supply and demand can help your game of forex trading.
Exit on Time
Although the long ranges usually does take a long time, the long ranges do not necessarily pint towards institutional buying. So there is no point waiting around at a supply zone to see price spending. The best supply zones usually happen to be narrow and last a short time. A smaller zone of accumulation also works much better for making reentry at the time of pullbacks.
Leaving the zone
When the price leaves the supply zone, it starts trending. This also indicates a strong imbalance between sellers and buyers which causes exaggerated movements in price. The primary rule here is to keep in mind the fact that a breakout with larger impact, the demand zone improves, this is especially true in case of shorter accumulation.
The price visit for shorter duration
When price is shortly in the supply zone that is the true supply and demand zone. This does not happen fast. The accumulation of position is time consuming but normally the long ranges does not indicate that bigger players are coming into play. If the price does not hold too long, that’s when the supply zone is best suited. A smaller price paid at the supply zone means reentry is much more impactful at the time of pullback.
The fresh supply zone
It is best to ensure the supply zone is fresh when trading forex from a supply area. Which means, once the zone is created, the price has not returned to that point. Whenever a price revisits this zone, it is an indicator that there will be an impending weakness at this level due to all the unfilled orders.