How To Short From Demand

For those of you wondering about the title, there is no typo. This article is about how to short from a demand level. There was a short opportunity this past week on EJ and I'm going to run the analysis so that you can spot similar opportunities in the future.

Daily

The daily chart of EJ shows a demand level which was recently broken and this presented a great opportunity to short. Most of the short trades I post are from supply levels as you would expect and I don't often short from demand but this time it was different. The main reason I was interested in this level is because of the profit potential. Below the demand level there was nothing but green candles indicating that there wasn't much to stop price falling further, should the demand level be broken.

A27 Image 1 Daily Demand

 

H1

When you at the price action that caused the break or engulf of the daily demand level, you see that there is a supply with a strong move away which was the likely source of the engulf. The next step is to wait for the 5m to confirm the level.

A27 Image 2 H1

5m

The 5m shows a perfect entry with a QM and an obviously supply level within to short from. Price dropped from the level and never looked back.

A27 Image 3 5m v01

Result

You'll notice two H1 demand levels marked in blue where price could have turned. The first one was engulfed but the second one held so it was time to exit. The entry was pretty much the same as usual. The only difference was the higher time frame level. When you see profit potential after a break of demand. look for shorts.

A27 Image 3 5m v02

Happy Trading.

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1 Comment

  1. Gokeplus on October 8, 2014 at 12:38

    Nice! You make it look so easy 🙂

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