Collected by Nbr42 (https://www.forexfactory.

com/nbr42)

Balhana Trading Note

Supply/Demand
A supply zone is where it was decided that price was too high.

A demand zone is where it was decided that price was too low.

We know any cluster (consolidation) on any time frame is a balance between buyers and sellers. When one side is exhausted, then it
will break one way or the other. If there is a cluster followed by a strong breakout candle (a.k.a. momentum candle or pole),
the cluster is now defined as supply/demandzone where it was decided that price was too high (supply) or too low (demand).

Some S/D traders define certain candle wicks as supply/demand. Let's take DHC (daily highest close) as an example. DHC could be
defined as supply because price failed to close above, which means this is the level where people think price is too high.

Reversal Supply/Demand Zones

1) Drop-Base-Rally (DBR) Demand Zone

2) Rally-Base-Drop (RBD) Supply Zone
As both of the above are ‘reversal’ zones they represent a directional shift in the supply/demand imbalance.

Continuation Supply/Demand Zones

1) Drop-Base-Drop (DBR) Supply Zone (Flag limit)

2) Rally-Base-Rally (RBR) Demand Zone (Flag limit)
As both of the above are ‘continuation’ zones they represent a brief balance before another imbalance in the same direction of the
preceding trend.
[Bearish Whipsaw Engulfing]

1. Cluster (where supply and demand are balanced) near supply.

2. Cluster resolves north and becomes demand. Many novice breakout traders go long without knowing that they are going right into
supply.
3. Cluster is engulfed south by big sellers in supply. Ignored cluster now becomes supply.
4. Need to go short when/if price retraces to cluster. You may find DBD in Sell Zone in lower timeframe to refine your short entry.
Note: Bearish/Bullish engulfing momentum should be strong in this pattern.

.
Look at BTCB/PB and BTCA/PB.
Quoting livindaylite

Greetings Lovely charts here, Balhana and Keroroo esp. (is it ok if I spell it like that?) Hopefully, I can post some charts here and questions. I was
looking at GA which looked like it engulfed a Supply level indicating it wants to resume and carry on with the up trend. However, on LTF i got shaken
out and there hasn't really been much movement either way. However, looking at it i can rationalize price going either way. I guess best to wait in
that case and look for a better opportunity, but thought I'd ask your view on this question of Fake-Out...

No clear answers to your question on FA and Engulf. When I go long based on Fake-out, right after closing the trade, sometimes flip to short based on E/PB if
both engulfingand pullback momentum are not strong. Momentum analysis is very helpful to distinguish between FA and E/PB, but not always.

Anyway, I sold GA and closed 2/3 for +135 pips. Now SL @ BE-15 ( see above pic)
An example of weak engulf and weak pullback.
 Bull/Bear Trap

When a support level such as a swing low or a trendline is breached, the market often attracts fresh interest from buyers and sellers.
The buy low crowd come in looking for value at previously cheap levels, while the breakout following crowd sell the breakout looking
for an extension of the decline. If the downside break fails to see follow-through selling, frustrated short sellers cover their positions
bidding the market up creating a whipsaw. The market advance is exacerbated by the 'wait and see' crowd who come in after most of
the cards have been played. Some examples of the Bull and Bear Trap:
BT+CP
BT+E-PB+CP
3 Taps into SD
 3 Drives Up/Down
EUR/JPY 4H "3 Drives Down"
EUR/CAD 4H "3 Drives Up"
 Quasimodo

Refer to the website (No Brainer Trades) for more detailed information on Quasimodo (Over/Under Pattern).
Quoting Balhana

{quote} One thing I want to tell you is that often times I don't see any difference between WE/Trap/QM/H&S. Have you ever thought that retest of
bull trap looks like a right shoulder of H&S? If I say I use H&S, then does it sound old fashioned to you?

Is this Head and Shoulder or Retest of Bull Trap? It doesn't matter, but one important thing is that I usually get in before the neckline is broken. Check out
the chart below. I would have sold where I marked if I had been at the computer.
Let me explain my approach called "TIME" including how to draw horizontal lines based HTF candle closes.

(1) Top-down analysis

"Entry based on LTF PA @ HTF SD - High Probability"

I believe your trades should be based on LTF PA at HTF SD in order to increase your win rate. Do intraday traders need to check monthly charts? I think yes.
Monthly/Weekly/Daily zones are too wide for intraday traders (like me) to hide SL. Then how to use HTF SD?
Take a look at the current monthly chart of EURJPY.
(2) Impactful patterns

try to find strong impactful patterns like "Bull/Bear Traps", "Whipsaw Engulfing", "Spike Base", "Quasimodo", and so on.
You can see two bull traps on EJ 30M.
(3) Momentum analysis
(4) Engulf

Need to check bullish/bearish engulfing before pulling the trigger.

(Bearish engulfing in the EJ case was made too quick to get in. I couldn't catch it. I took UJ short instead. )

One more example of my TIME approach.

Quoting charvo

Hi, Balhana: thanks for your examples posted not only this one but those in the past 2 years! i actually have been trying to categorized your trades this
EA trade is a type that shows up much less frequently than the type of "BT+enter on PB(or momentum)" if you know what i mean..... this EA trade is more of
a breakout or follow momentum or continuation type. What's the key consideration here? my own guess is: * the resistant S/D ahead of the price would need
to be consumed * a new supportive S/D would be behind the price, and identified * momentum...
Hi Charvo, look at the charts below.
Bull/Bear Traps are also known as "False Breakout", "Fakeout", or "Stop Hunt".

When a support level such as a swing low or a trend line (including wedge and channel) is breached, the market often attracts fresh interest from buyers and
sellers. The buy low crowd come in looking for value at previously cheap levels (demand), while the breakout following crowd sell the breakout looking for an
extension of the decline. If the downside break fails to see follow-through selling, frustrated short sellers cover their positions bidding the market up creating
a whipsaw (bear trap). The market advance is exacerbated by the 'wait and see' crowd (like myself ) who come in after most of the cards have been played.

Check out my charts with the above mentioned concept. Hope this helps.
Engulfing Momentum:
E/PB - not very strong
BTCAorB/PB - very strong

Pullback Momentum:
E/PB - weak/medium
BTCAorB/PB - weak

Pullback Distance:
E/PB - medium/Long (Price retraces above zone after engulfing zone south. / Price retraces below zone after engulfing zone north)
BTCAorB/PB - short (Price never retrace above/below zone engulfed)

Quoting windpower
Hi Keroro, Thanks for always sharing. One more thing may ask. Currently I went thought the thread and have the problem with one post. Please refer
to:http://www.forexfactory.com/showthre...96#post7293596 Question： 1. What stands for E/PB? Does BTCAorB/PB means Breakthrough demand and close
above or below? 2. how to understand Engulfing Momentum: Pullback Momentum: Pullback Distance: Since lack of context, may hard to figure out the real
meaning for these words. Many thanks!
Hi,
E/PB = Engulf/Pullback.
BTCAorB = Breakthrough Close Above or Below

Engulfing momentum = how strong is the move which engulfed a significant demand/supply?
Pullback momentum = how weak is the pullback back to the engulfed demand/supply which potentially become a swap zone (demand turned
supply/vice versa)
Pullback distance = if zone is not engulfed strongly, the pullback should be further/longer than when zone is engulfed strongly.
Suggestion: Go through Balhana's charts, and develop your understanding on SD + PA. That’s how I did it.
 Some Important Note by Master Traders

Nothing promises that zone will hold price, even at first visit.
The zones we mark on the charts are mainly a mapping of decisions in the market. Decision can take price either way.
Zones are meant to be broken, and this market decision has its own significance too.

As further you go with your reading skills, you will be able read the hints and clues for zones to hold or to break.
Your task at this time, is to train your eyes defining the zones.

Your next step, is to investigate how price is behaving around these zones. there are few things you should bare in mind while you do this work:
1. Be aware of how price had printed the zone you marked, what it was reacting to, and how the decision of price to move further look like.
2. Be aware of how price is approaching the Zones, what is the dynamic.
3. Is price come from a valid opposite zone ? Remember that price goes from Demand to Supply and vice versa.
4. Be aware of the reaction of the first touch, how deep it went inside, what had stopped it if any?
5. what are higher or lower TF tell you. SD discipline is a Multi time frame concept. We trade price levels, not candles, so Story may vary on different TF
6. (more Advanced) Look for correlations with Index and other pairs.

it might look intimidating, but actually it's should be very simple. Zones are always a reaction of past Price Action (aka: always look left).
As much as you can go back in history, the better your understand be of how price move. there is no randomness for this market, all can be explained with PA
reaction, result, decision. just look for reasoning for levels and zones creation.

Best,

What I am getting from your last is that engulfing applies to both RBDs and a flag limits. Which is fair, if I'm correct.

You mentioned an "RBD engulfing a previous one." That part did not make complete sense. And if there is something already written about this somewhere, don't
waste your time on me. But I haven't seen anything as of yet.

Also, is it me or is a RBR and a DBD (on higher timeframes especially) the same or very similar to a flag limit?

Are these just interchangeable terms?

RBD = engulf
DBR = engulf
FL = RBR or DBD

Am I correct? Terminology is very important to me as you can see.

EDIT ----
From the Supply and Demand page

"supply/demand are often reactions to the Flag Limit (a RBD or DBR after a break of a high or low)."
This makes things a little clearer, but I still want to be clear on what is definitely interchangeable and what is not.

EDIT ---

"In LTF, does price react violently to the first decision point? Does it quickly engulf the nearest S/D? (good sign)"

This bolded question leads me to believe an engulf can be both up or down.

-------------------------------------------------------------------------------------------------------------------

Decision Point

Regarding the Decision Point. Try to think about the definition of a decision point.
I say when One side of Bull or Bears are winning and moving price further in their direction.
We spot the DP where we see the last opposing power. Exp.: if Bulls win, we set the DP to where we see the last Seller. Usually that would be at the opening of
the opposition bar.

When either side wins a battle, it is called a Decision - a decision to move to the next level.
What I think was confusing you, is that the next level did not set new high. it is not supposed to. But the decision was made to move higher.

For the DP not creating new High, it was a hint sent to you, to tell you possible sellers are gaining strength. when last leg DP was broken, they were sending a
louder message about their intentions for more selling.

This is how I would look at it.

Hope I am being more clear this time.

compression

This perhaps should be the first thing that anybody ever reads regarding trading:

We're always looking for signs of what the big guys are doing at significant areas, and if we don't see what they're doing, there's no trade

So, on approach, if we see the big guys trying to hide their orders in the market, we see compression, and can feel pretty sure of their intentions - to get in as many
orders as they can before the turn

If we don't see this, we can be pretty sure that it won't just turn immediately, as there usually won't be enough orders against them to fill all the orders they must fill.
This is why we wait for an engulf. This shows their intention to reverse price. Then we watch them trying to hide their orders in the market on a retrace, ready to
take price to the origin of the move

-----------------------------------------------------------------
A CP is a PAZ
If you're having trouble spotting your PAZ, look to a CP zone,, look to its engulf and FTR. That'll be a reference for all your further PAZs

Raven, you'll need to look further left for PAZ engulf and FTR in order to draw your PAZ1 properly

Each PAZ remember, is formed by the FTR after the break of the last PAZ. (that's why, when you look across a zoomed out chart, you can see Zones lining up in
bands all across the chart, be they flags, poles or empty space. The don't line up to the pip though because it's the break of one and its FTR that creates the next,
offsetting it one way or the other each time :) )

-----------------------------------------------------------------------------

For me there are four types or returns,

RT or FTB with normal respect to the zone.
FO which engulfs and rejects the zone.
ENG which engulfs and continues in the direction of the engulf.
A fourth return is the fail to return.

FO vs ENG

When I see an engulf and wonder whether it is a FO or a ENG continuation I'll look for;
the strength of the reaction after the FO/ENG
1 ... cp back to fresh zone (weak reaction), perfect to tighten your SL or if you're confident add another position.
2 ... lq engulfing fresh zone/dp/fl instantly (strong reaction), you should get out of your trade and wait for your entry signal
3 ... cplq (wedge... ) continuation after the FO, which should now be named ENG instead of FO.
4.... instead of reacting to the FO/ENG price could also simply form a DP/FL only to advance with strong LQ
5.... price can also cp back to the fresh levels only to consume them and hit you with LQ (hate it when that happens), but most of the time you will see a S level
turn D before that happen, vice versa D turns S.

So in general I look at the reaction + where the nearest zones are to counter this reaction (defensive range after effort)
and I also base my conclusion on what the HTFs tell me, of course.

BTW good question, hopefully my little explanation helps :)

cheers
oz
I'm really impressed with what you got from that!

To answer your questions:

1: Is a rejection from cap the same as an FTR? If not, how are they different?
It sure is. Well noted!

So, from what has been said so far today it arises that rejection from cap (aka FTR) is at the same time FLAG LIMIT...

And the edge of the PAZ

There's no other lesson to be taught

And in my own words :) , "The level at which price leaves a zone and fails to get back into the zone is the FTR (FL). So we now have a PAZ above the
FTR and another PAZ below the FTR, and we can operate within these individual zones".

EDIT: oh, and the FTR (FL) level is the DP between the PAZs.

IF:

Once price engulfs a level, all that's important is how far it retraces before hitting its target.
While the pockets of orders remain in this RT, it remains strong. If price totally compresses (picking up all orders) forward from the tip of the RT, then we will look
primarily for the orders at the entrance to said CP.

That's really good!

I did leave out a few boxes, as they weren't necessary to make the point.
Some pointers on chart

IF guru....as you said earlier.."find where engulfed happened and draw FL extent of RT"
did i get your point...
thx
Hello IF,

I think I am onto something here, I think I underestimated the importance of PAZs.

Assumption: I am able to draw PAZs CORRECTLY, then I would be able to...
1)... define my targets very precise, as I already know, that if price pierces a PAZ, it wants to travel through after a retrace.
2) ...(more important to me right now) define if an Engulf is really an Engulf, because if price engulfs a low, but does

NOT pierce the next PAZ it is not an Engulf, but a Fakeout!

-----------------------------------------------
Just a quick question if you don't mind. Is this simply just a bad engulf signal into the zone below?

It was a real engulf of a low, sure, but into what?

Remember, if we don't zoom out, we don't get to see the full picture of price. We don't get to see the significance of tiny kinks which seem insignificant in our
zoomed in view
Yes your marked that right. FL you marked earlier is a CP swap FL( I know you never heard this , so i just wanted to confuse you as
usual )
Now i didn't say you marked wrong. I was asking the question when price react from blue FL it is also reacting from Red QM box. So
which one you will take the origin?. And what parameters you use to decide that?. That's all i asked you to think.If you find the answer
please share with me (by PM ).

note:Fractal nature of price will train your eyes to see the smaller TF same as larger TF . Keep this in my mind " What is in the universe
also in the atom".

Ok Thanks guys . Time to go for break will see ya later.

Answer by harry: (Below)

Hotochin, from the flag i like to trade the FTB to the FL, and the break of the flag after price returns to it (after it has filled the pole base).

to trade the engulf of the FL would require a few things

- that the further FL point is a reaction to something significant.
- and also that it gives me a clear place like an FTR or such to base a trade on.

Pedini and sunny do that a lot in their journals with good success btw, so they are more experienced in this matter.
not all structures are good for such a trade but they find good ones and they work for them

btw, if you have specific example post it and we can discuss it

1. After engulf of FL yes, sign we could be going lower. but i took a TT so i couldn’t know it would engulf at the time.
2. Remember that the FTB to FL is a higher probability trade than the trade you suggest (after engulf of FL to wait for return for a cap to take a short).

My head has had "All flags are FTRs, but not all FTRs are flags" going round and round in it. I've been trying to get straight when we should expect price to reverse
at a flag, and when it might reverse at an FTR above. all I can really determine as yet is that a "quick" return to the flag is better, and a more drawn out return is
better for an FTR (that's one of the "odds enhancers" for an FTR, in fact). So, this came into my head.

I shall speak my brains....

1. Here's the pole, big buying
2. Price flags on the way up - we should look for a long entry on the FTB to this
3. Price makes a more local flag, here - likewise, could be a long on the return. Price creates a high from here.
4. Here we have the FTB to the local flag - long opportunity
5. The target for the long is back up into the previous high. Now we don't know what's going to happen. Price could break the previous highs, or it may drop to
break the lows created by 3. We don't know, we have to wait (on this time frame, anyway).
6. Price returns to the flag, but we don't get a signal to do anything - we trade from the edges of flags/ranges, not the middle.
7. Oh, come on! I'm getting bored, now... Ok, arguably we broke the high at 5, but not the high before that. Was that a fakeout on a lower time frame, into the high
before 5? I dunno, but it looks like it might have been.
8. OK, so now we know it was a fakeout, as the IT selling has now engulfed the flag at 3, and is now also the FTB to the flag at 2. Wow. So, we take a long here,
targeting the high at 7.
9. The ITs are protecting their position at 7 (where they made the fakeout) and sell right through the flags at 2 and 3, and the low at 8. That's a strong engulf, and
now 9 becomes a pretty good FTR.
10. Price flags just under the engulfed area, as it decides what to do next
11. Price breaks down, but does not reach the base of the pole (Aaron ) and so we should look for a short on the FTB to the flag at 10.
12. Here’s the FTB to that flag.
13. Our target for the short is the low made at 11
14. Errr, it's usually 13 that's missing from airliner rows, etc. Oops.
15. Price has cut right through the supply at 10, and has become demand - we should look to take a long at the top of the zone created by 10.
16. The target for that long is the superb FTR created at 9. We also look to take a short at 16, aiming for the base of the pole.
17. We need to be careful (maybe take some profit) as price returns down to the demand at the 15 flag. In this case it cuts right through. It might even give chance
for another short from the underside of the flag
18. The engulf of 2 and 10 by the move to 11 gives us the confidence to aim for 18 as the ultimate target.

If I can ever do this (or 50% of it) in reality, I'll be the happiest guy on this site (or any other).
Salivan Reply to mika : Below

good work by you and also good question , they are really important knowing where is price and where it must go make a trade more comfortable but when we
don't know it makes us older and we get suffer in that . According to you questions, if you don't mind i write something for you and i want you to go and investigate
it in your charts.
Where price turn?
This is the question of all of us. Ok, price turn on those places that are S/D but we must know what they are its self-reaction to ?
Are they reacted to an important DP in past or not?
Price always starts its turn from FL and goes to the origin of the move (look for LTF FL in that origin).
How to identify FLs?
OK good, look for them in where some decision made in price to engulf another decision and failed to return in, these are you FLs.
apply this on you charts for times and times and then you will see interesting AHA MOMENTS
have a nice trip mate
hiya micka , you are always welcome to share your artistic charts
i myself try to trade in the extremes of a PAZ, and sometimes i miss nice entries also , but it worth it . About your chart if i understood correct from what you did ,
your answer is why price don't reach to that important DP then fall or rally .
Generally price goes from FL to FL and we must understand the value of FLs and i am still working on it. But you know that there are a lot of DPs in the chart that
the decision made to break a barrier in them but price ignore them in his wy up or down, it has some reasons:
1- we need to know where did price come from?
What does this question mean?
ok, it means: is price coming from a HTF S/D zone? If yes (assume price come from daily SZ), then price can break all the barriers in the way down, and we
should not expect big reaction in those DPs, so this is why RTM says always trade in the direction of major ENG.
2-we need to know if there is any better true S/D above or below our S/D zone or not ? (DP, when i say DP don't mean all DP or something like this, i mean true
S/D with a tricks that played in there in past )
3-we should imagine ITs mind , as Gil told we should wear ITs hat in our head to be ready for future tricks that are always will happen against retailers sometimes
with few pips just to hit Stops and you know the rest of scenario sure ....
4- i am new , yes i am new to this method so as IF says always draw you zones and always trade in that areas,
5- as PED say looking at PA is always better and if i TT it means i am a bit lazy to wait for confirmation .
6- when a important DP(again please don't look at DPs as origin of break or something like that , i mean true supply and demand) ignore then price get importance
in the value in return and making FTR ,
7- don't look at patterns at all , all patterns have defined target before they form (in RT)
CAN CAN is FL ENG- RT in CP to FL
QM is FL ENG-RT to FL
CP is taking out demands in the way up to a true supply(FL) and after entering to the CP paz( ENG of a FL in LTF )we can trade in RT(again to FL ) to the target
the extreme edge of CP(again FL)
Diamond is FL ENG before reaching the HH to true supply -RT and active STOPs ( FOed to true supply(again FL))
and all others formation of price action have defined target and entry zone , we just need to open a chart and try to find real PA signals not all of them .
in the case of your charts:
we need more details , believe me or not i myself for a trade need 4 H TF in very left to now to 5 MIN TF at least to find a proper interest area
oh ,i edited your charts but i cannot post it here bcz of the size , it's about 1 MB and if i resize it noting will be appear , so please help us in posting your charts .
I know where my entry point. But big mistakes with outs.
May be here in community I can find it but I can`t. Show me this article or message please or tell:
1) Get out when we have opposite engulf in same TF in which we entry.
2) Get out half of position on first opposite FTR, FL or s/r line. And another half in opposite demand or supply.
3) Get out all position on opposite demand or supply.
Very often I get out on first problem area by full position and due to this take only 40% of move.
Please tell what will be better, what you use?

a friend PM me about the targets, for me there is no target without FLs , about my targets i read the orders , i told that before that targets are more important that
entries , because when you know where the target is, you know the whole story . it takes thousands of hours for reading the market not drawing rectangles . the
more you look at the market in An ongoing basis the more you learn how to manage your trade . Really about targets, i can say only this:
trade FLs and close it in FLs.
Read the scales
understand orders not TFs.
i have nothing more to say .
Hope it helps you.
 Some Important Masters Post from FF Threads

@mel
Joined Dec 2009 | Status: I'm not a guy... | 241 Posts
Quoting Chanya
Thank you very much mate for your help ... I have a couple of more questions ... If I may ... As you have explained , and as I now know a little about where a
supply and demand area's might exist , how should we draw these areas ??? I mean, how did you know where to place those two lines at the supply in the first
two charts??? Is it an exact thing of where those lines should come??? Secondly, what’s the exit plan??? Where would you have closed these two trades???

Hi Chanya,

You are welcome.

Please re-read my previous post again...

Here I quote myself:

How to identify supply and demand levels?

When searching for a supply area we look for a base, structure wise this looks like a consolidation area. Preferably the base will not contain much candles.
Then the key thing to look for after identifying a base is, the way price left this base. If you see a violent drop in price with big red candles, then you know
that Big Money was involved in the trade. So we know that, when price will come back (pull back) to that area (the base), there is a big chance that price will
drop again (and vice versa for a buy at demand). This is where we want to look for a trade

So...
1) We look for a base (the consolidation base) then we look for
2) Either a drop in price (for supply) or a rally in price (for demand). If the huge drop or rally has happened, then we know that big money was selling/buying at
the particular base (consolidation base)

For the exits, they are many different options but since we are talking about the basic supply/demand stuff, we should look to exit at a demand area if we were
in a sell trade or exit at a supply area after a buy trade.

So, before ever considering taking a trade you should have your game plan in place. Let's say that you have identified a potential supply area, now look at where
the first next demand area is for a potential target. Look for the RR there. Is there enough room for price to drop? How big is your stop in reference to your
potential target area?
 FX.Sniffer
Joined Jun 2008 | Status: Stay Ahead | 313 Posts | Invisible

I wanted to show the difference between S/D, SR, and PPZ on charts as pictures speak louder than words.

I've marked the major/strong levels plus a few minor/weaker levels in a three charts for the same instrument and time frame.

You can see by yourself the differences and advantages/disadvantages of each method.

IMO the four most important differences are:

1) As been taught everywhere SR is a zone not just a line drawn on chart, same applies to PPZ. However, S/D is drawn as a zone defining the max DD (how deep
price can go into the zone) with a specific SL behind the zone in case it fails.

2) In most cases SR and PPZ are determined after the fact, when there is always a S/D decision reference in LTF if not on the same TF.

3) S/D zones on charts are more specific and less in quantity compared to SR, on the other hand PPZ is a filtration of SR.

4) S/D is so much cooler than SR no kidding..with all the rules, odd/probability enhancers, stacked levels, CP, consumption, order flow, etc...allowing you to
fine tune/sharpen/polish your price reading.

That's it...thank you.

There can be a LOT of material to wade through in public forums. I have read through this thread, and although there are lots of good posts, some of them
caught my eye more than others. What follows is just a little summary of posts/info/charts I liked while flicking through and for those that may not have the time
to read this forum end to end, could serve as a useful summary.
Whiteout: Every RBD/DBR or RBR/DBD is a decision point.

Whiteout: Decision points are a change in value. The bigger the change, the bigger the value.

Benhur: Nice chart showing how to correctly draw a base.

IF: Every DBR and RBD has its own importance and value, and nearly everyone can be traded. For each one that you find, zoom out to the HTFs and see what
historical significance the decision point has.
> Perhaps it's a failure to get back into an important PA Zone - these ones are special.

> Perhaps it's within an HTF compression zone to the left - ask yourself would you take this trade, or wait for the tip of the zone?

> The bigger picture will always help you decide on the significance of a DBR/RBD.

Tyoon: What defines a base is that price moves up or down, bases (consolidates, congests, clusters, etc.) then moves again either up or down. Here are the
variations.

The standard DBD and RBR then the RBR and DBD then RBD during downtrend and DBR during uptrend.

Hopefully this could give you a better understanding. However as you have alluded to, H/L or S/R levels are almost always an intrinsic part to the development of
any base. If you can find the levels responsible for the bases it can give you a much holistic picture on the chart.
IF: The two charts on the right, in HTF, can often look just like the two charts on the left. It's worth looking into these on your charts, and finding out which tend
to perform better on price return - drop/consolidation/drops or drop/RBD/Drops, and the same for rallies.

Mel: I like Mel’s charts and explanations. I had to add at least one.
IF: IF asks this… but I am not sure what IF is pointing out? If someone knows, please post your thoughts...
IF: Pointing out the significance of the engulf.
Benhur: I thought this was an interesting comment about the lack on convincing buying/demand.
Rufus: To me how price leaves a zone is the way I judge it the most. Another is when the zone was formed and when price returns.

Benhur: Look for DBR/RDB that is the strongest. You can define strong level by 2 criteria:

1. How strong was the away move >> then >> it’s a strong level.

Why: We assume that at the decision point of breaking the balance (among sellers and buyers) are left with stacks of un-filled orders.

2. How Long was the Price at the defined level before it unbalanced > the least is better.

Why: As more time given for buyers and seller to negotiate, the more deals the close. The least amount of time they have to negotiate, we assume the more un-
filled orders left at the zone.

IF: One thing which I have mentioned many times before, but not yet in Marketpedia (soon to be remedied), is that in a bigger picture range, Supply and
Demand zones near the edges may not hold as well as others. Fake out often occur, because price is attracted to the limits of the range.

Benhur: Nothing promises that zone will hold price, even at first visit. The zones we mark on the charts are mainly a mapping of decisions in the market. Decision
can take price either way. Zones are meant to be broken, and this market decision has its own significance too. As further you go with your reading skills, you will
be able read the hints and clues for zones to hold or to break. Your task at this time is to train your eyes defining the zones. Your next step, is to investigate how
price is behaving around these zones. There are few things you should bear in mind while you do this work:

1. Be aware of how price had printed the zone you marked, what it was reacting to, and how the decision of price to move further look like.

2. Be aware of how price is approaching the Zones, what is the dynamic.

3. Is price come from a valid opposite zone? Remember that price goes from Demand to Supply and vice versa.

4. Be aware of the reaction of the first touch, how deep it went inside, what had stopped it if any?

5. What are higher or lower TF tell you. SD discipline is a Multi time frame concept. We trade price levels, not candles, so Story may vary on different TF.

6. (More Advanced) Look for correlations with Index and other pairs.

It might look intimidating, but actually it's should be very simple. Zones are always a reaction of past Price Action (aka: always look left). As much as you can go
back in history, the better you understand be of how price move. There is no randomness for this market, all can be explained with PA reaction, result, decision.
Just look for reasoning for levels and zones creation.
Les_Paul: Interesting post (have not copied content to here).
Rcmacf: My "wow" moment for today is the realisation (whilst very slowly getting through this homework) that every RBR and DBD are, on a LTF, a DBR and a
RBD, and are thus valid places to take a trade or set a target. I don't see evidence (so far) that one is any weaker than the other. That may change after going
through 200 of the buggers, though.
What I can see, though, is that there is a bigger reaction to the right when the DBD/RBD engulfs something of more significance to the left. The real biggie here is
1a, which as well as being a retest of the decision point to break the flag at the extreme left of this chart, is also an FTR (as are 1a, 2a and 3a) and the source of
the entire move lower.
To be more precise, it's when the DBD/RBD is a decision point for that engulf to happen. I guess that's the same thing as the "source" of the engulf?