Course Hero Logo

3. Supply_and_Demand.pdf - Supply and Demand Created July...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 4 out of 18 pages.

Supply and Demand1Supply and DemandCreatedTagsConsolidation and ExpansionThe markets either do one of two things:Price either consolidated or expands. This is impulsive and correction, so thecorrection would be the consolidation phase, and the impulsive phase is knownas the expansion.Consolidation:A period in the market where price is movingcalmwhich moves in a rangeknown as the dealingrange.The termrange bound,rangingorconsolidating, this means that price istypically staying in one area, and just moving sideways, rather than up or down.The range can betight(meaning a spread of only a few $, or the range can belarge(meaning a spread of hundreds of thousands of $ from range high to low.This partly will come down to the timeframe implemented.Now usually the lower the timeframe the tighter the spread, meaning it can bea few $, and the higher the timeframe the looser the spread meaning the moreJuly 14, 2021 132 AM
Supply and Demand2money basically.So to conclude, the consolidation is where prices moving calm and ranging, itsjust sideways price action and if we look at this diagram down here, we can seethis is would be our consolidation phase, where price moving sideways, so wecan see going up, down, up, down, sideways price aren´t moving in onedirection.Expansion:A period in the market where price is movingaggressivelyin one direction orthe other. We will see an impulsive move to the upside, or an impulsive move tothe downside, where price will give us large candle bodies or wicks.As we can see on image above, we had a large impulsive move up. This isexpansion, so we will see large candles or large wicks in one direction over theother.Supply and Demand TheoryDemand zone:Is the area of consolidation that comes before an impulsive move towards theupside (bullish price action). So a demand zone is sometimes referred to as abullish 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 themfrom the top side. Demand zones are used to enter longs and/ or close shortpositions.How to mark off our demand zones?We take the low of the range, and thehighestcandle body. Or we can takethat ranging price as a whole.
Supply and Demand3Supply Zone:This is the area of consolidation that comes before an impulsive move towardsthe down side (bearish price action). A supply zone is sometimes referred to asabearish consolidation block.What we will usually see is a range-bound market, followed by bearishexpansion.Supply zones can act as resistance when price action pushes up into themfrom a down side. Supply zones are used to enter shorts and/ or close longpositions.

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 18 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Winter
Professor
N/A
Tags
Supply And Demand, demand theory

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture