Major Market Moves From Supply

When trading from the higher time frames large moves are anticipated. However it's not very often that price moves from entry to target as quickly as it did for me last week on the EN. I wrote an article on how to identify high quality supply and demand levels which your can find here and the trade last week is an example of that type of trade.

EURNZD

Daily

EN often has large moves but it's rare that I see the entries that I like so I don't trade it as often as other pairs. For the last 2 weeks I've highlighted this pair as one to watch in the weekly outlook posts but this has been for long opportunities. The trade I took last week was short and I'll explain why.

Price engulfed a significant level on the daily chart and left a clear path to the demand level that I identified below. The engulfed level was significant because there was a large rejection from it and price stayed above the area for over a month.

A20 image 1 D1

H4

After the engulf, I dropped down to the H4 and there was a nice looking supply level. The next step was to set an alert for the H4 supply and wait for price to return. When price returned it did so in a strong fashion with nothing but green candles signalling that there wasn't much to stop price should it fall from the level.

A20 image 2 H4

H1

The view of the supply from the H1 level shows that its actually tighter than the h4 which means the stop loss can be also be tighter. The image below shows a QM on the H1 too. I normally look for QM's on the 5m chart for entry but the fact that a QM was also viewable on the H1 only added confluence.

A20 image 3 H1

15m

Price action on the 5m didn't show a clear supply level but the picture on the 15m was better. The nearest demand level was engulfed completing the QM pattern so I entered.

A20 image 4 15m

Result

Within a few hours price had dropped straight to the pre-identified demand level so I marked the nearest 5m supply and when price engulfed it I exit the trade for over 200 pips.

A20 image 5 5m

A20 H1 dukascopy

I hope you found this useful

Happy trading

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7 Comments

  1. Gokeplus on September 8, 2014 at 06:35

    An great top down analysis and trade. Thanks for sharing.

  2. Janet on September 8, 2014 at 15:30

    Great post! Very helpful indeed.

    • Joe Wright on September 8, 2014 at 21:04

      I’m glad you found it useful Janet

  3. Terry on September 11, 2014 at 03:06

    Thanks Joe, I like the way you lay out your trade analysis. Very clear and logical. Trying to learn to do the same.

    • Joe Wright on September 14, 2014 at 18:57

      Your welcome Terry. I try to keep it simple and easy to understand. I’m glad you find it helpful

  4. naveen on January 8, 2015 at 03:09

    Dear joe,

    Nice trade. Keep it up.

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