Supply/Demand Flashcards
Should we reuse order blocks following a break of structure?
No!
What are order blocks synonymous for?
Supply/Demand
What is Supply/Demand (order blocks)?
Zones that price marks as a level of interest where liquidity was injected to be used at a later time.
What is the last buy to sell? What is the last sell to buy?
Supply/Demand
What is required to form an order block?
BOS
What is the more refined way to trade (As opposed to taking range supply or demand)?
Using an order block or better an order block with imbalance
What is different for an order block with imbalance vs regular order block?
Only one candle in the block.
Why are order blocks with imbalance better?
In theory if one candle inside of the block there is more likely to be institutional involvement.
In a buy to sell, if the sell wicks above the buy, is it OK to include supply to the top of the wick?
Yes, if the wick above isn’t more than 25%ish the size of the candle. Generally, if we go to lower TF’s, we find there is supply in the wicks.
Give a point of the confluence to a good supply zone?
Inducement (price fails to get into the zone, then comes back into the zone later and reacts). This could be institutional traders trying to protect their positions.
Should we put more emphasis on an OBI block below a BOS line vs one above it?
Yes, always. We like to see price mitigating the previous range supply/demand.
In a sell to buy demand scenario, is there a circumstance we can use an up candle?
Yes, if the candle is a “line candle”. It must have a large wick to the downside showing, even though it closed up slightly, price did try to sell evidenced by the wick.
What is a supply to demand flip?
Where supply fails and price comes back and breaks structure again creating demand in its place.
What is a range?
Sideways consolidation/and or correction that is easily visible on a price chart when we see sideways price action. Found on all time frames.
What does slow movement away from a range mean?
Low Volume environment
What does rapid movement away from a range mean?
High Volume environment
Can ranges exist in both high volume and low volume environments?
Yes
What does movement out of a range and a quick retrace back into the range indicate?
Likely low volume of potential wyckoff in the making.
Describe the different pricing ranges in a range?
50% is the equilibrium, above is premium pricing, below is discount pricing.
When drawing market structure in a uptrend, how do we draw the range? What about a downtrend?
From up to down or high to low. In a downtrend draw from low to high.
What is range created demand?
Price breaks structure where it had been ranging. The previous higher low and higher high is all technically considered demand.
What is pivot created demand?
We don’t get the range effect, it’s simply the last sell to buy. Same as an order block with imbalance.
What is range created supply?
Price breaks structure down where it had been ranging. The previous lower high and lower low is all technically considered supply.
What is pivot created supply
We don’t get the range effect, it’s simply the last buy to sell. Same as order block with imbalance.
Is there always a range created zone?
Yes, if you go to a lower TF the last pivot supply/demand is a range. For example, if you see a pivot on a 1 min chart, you would find ranges on seconds charts.
What is a method for refining range demand?
Price retraces into a larger range. However, we may see a smaller internal range that caused the larger break. Think of it as the real range that caused the break. This is a good way to refine our entries.
How do we look at price from a liquidity based standpoint to give a better edge?
It’s how price returns to the zone. 1. Rounded return - it’s returning to the supply/demand (using supply as example) making higher highs/lows but not significant ones. We can take the curve tool and draw it out to show the liquidity. If lows aren’t being taken out on the way up, it could indicate smart money building positions. Because there is liquidity to be taken it provides the extra edge.
- Corrective Return - Similar to rounded return. We can draw a trend line under the lows. Still showing lows haven’t been taken out and there is liquidity under.
- V Shape return- dangerous - No structure, straight up to supply. Not what we are looking for. Typically best to be careful and wait for a better return in these scenarios.
Footnote - You could have a combo where you have a rounded return forming, then an aggressive move, then it rounds again. This could still work on MS confirmation as there is liquidity that we can see.
What is range created demand?
Price is aggressively moving to the upside. Mid impulse it stops to range then continues to the upside creating a demand zone?
What is ranged created supply?
Price is aggressively moving to the downside. Mid impulse it stops to range then continues rapidly to the downside creating a supply zone.
Provide 4 confluences?
- OB 2. one candle in block (imbalance) 3. ran some liquidity in creation of zone 4. flip zone (i.e. demand failed and ultimately lead to supply zone creation).
Is it beat to use the bigger range POI?
YES! It’s just where we start watching for a train. If refine to much less likely to get in a trade. HOWEVER, once we come into a bigger POI - then we watch/refine. For example, wait for structure change out of bigger POI then grab a smaller OBI above and enter off reaction from that or another structure change.
What is a fair value gap?
3 candle stick pattern where the high of one candle does not meet the low of another candle. Note candle 1 and 3 are important, candle 2 does not represent anything about efficient or inefficient price action.
Explain the 25% trick with fair value gaps?
If the gap is right above a demand zone, we can extend the zone to cover the gap if it isn’t larger than 25% of the zone. Price tends to deliver efficient price action by filling gaps and front running zones.
How much of a fair value gap should be mitigated to consider it filled?
50% is a good rule of thumb.
What verifies a demand/supply range?
A break in structure
What is a mitigation?
Price coming back into a supply or demand range
After the break of structure that occurs following the mitigation, in theory, should price come back to the area of demand or supply?
No
Are there exceptions to the rule that price should not go back into a supply or demand zone after the mitigation BOS?
Yes. If price creates new demand or supply that is in that old area, it is OK to come back. New demand can overlap old demand.
Is demand valid after multiple mitigations?
Yes, but only if it hasn’t broken structure. That is the key, once the mitigation happens and it breaks, the zone is no longer valid.
When using a fractal zone should you try to only use OBI
Yes, the more aggressive price moved away from the zone the better.
Is the wick (creating a weak level) and then the transition out of a zone better then not having the wick?
Yes, always better to have the wick. But not necessary.
What is the difference between the extreme point and the decision point?
When you mitigate a zone, there could be multiple fractal demand zones. The last OBI prior to breaking the larger structure is known as the extreme point. The fractalized zones prior to that are the decision points.
What is inducement?
When we see price front run a zone. If price doesn’t break structure and comes back into zone, it provides more confluence the zone will work. It gives us a clue that somebody was protecting their position in the zone. They could add more to protect their position. NOTE: even if price breaks structure but comes back, we can use it as it still gives some edge, but we should really wait for the transition in structure.
Is inducement only following the break of structure?
Yes, it matters when it occurs. If the break hasn’t occurred yet it’s just relative to local structure. It isn’t really confirming much because the OB hasn’t confirmed itself yet prior to the break.
Does liquidity make an OB stronger?
Yes! Very important confluence. If an order block takes out liquidity, leaving little reason to go above/below it.
How can we use an unmitigated zone when looking at a demand chain?
Price might need a pull back on higher TF pull. It frequently shifts structure internally to come back for an unmitigated zone (likely unfilled buy orders).
What is a breaker block?
MS breaks against the zone. Supply zone where you get a bullish break or Demand zone where you get a bearish break.
What is the difference between a breaker block and a flip zone?
A breaker block is an extension of the rectangle, not a new POI. You simply drag a supply for example to the right and it is demand. Flip zones are rarely the same size.
Should we be frequently trading on breaker blocks?
No, it shouldn’t be a daily thing. Useful on occasion to refine a larger demand zone when we don’t have an order block with imbalance.
Should breakers react in the zone before moving through it?
No, the best breakers occur when price moves straight through it aggressively
Do breaker block senses make sense in range deviations?
Yes, sometimes price would need to retrace to far to the extreme point which would be considered a break down from the range. A breaker may be closer and allow price to deviate the range and come back.
How can we put emphasis on an OB?
Use fixed ranges, can use sideways fixed ranges, uptrend fix ranges, and downtrend fix ranges. POC shows us where most volume is.
In a sideways range, what does price like to do with respect to volume?
Deviate a VAH, then rotate back and deviate the VAL. To trade we want to see price come back into the VA,, for a structure based trade potentially testing the VAL or VAH.
In a sideways range, what if we see a VAH and an overlapping supply OB?
Price could deviate into the OB without deviating the top of the range. It’s not a bad short b/c you likely have hit extreme premium pricing of the range.
If we see internal structure breaking bearishly, how could we pull a volume pull in the swing uptrend?
Pull it from the first break, grabbing all the higher highs and higher lows. Stop the pull at the current high. If we see POC is in one of the demand zones, it would indicate that should be the preferred zone.
Can we volume pull the uptrend only?
Yes, which can give us a POC giving OB confluence. Especially on a higher TF pull.
What TF has over powered OBIs on alts?
12 hr
Can we use a GP with an OBI?
Yes, and we frequently see GP’s fronted if in an OB
Does breaking swing structure create a more significant zone?
Yes.
What is a flip zone?
An example is demand reacting, failing to put in a new higher high, and then losing the original dz and create supply in it’s place.
How does a sell to buy even happen?
Typically reacting off something, such as a supply zone that creates the sell. Always check wicks on higher TF’s for supply/demand on lower.
Give criteria for a stronger zone?
- Break structure (better structure (as in higher TF), better the play. 2. Flip zone - Sell to buy reacting off a supply zone 2 (leading to flip zone). Look for flips in wicks. REMEMBER demand/supply fails if it fails to break the level that created it. 3. - Sweep zone (takes liquidity in it’s creation)
Can wicks represent flip zones?
Yes, often they do. If we refine into a lower TF we typically find the supply or demand the created the sell to buy or buy to sell. Keep in mind as long as we don’t break structure on the sell or buy, we can have a flip. We CAN SFP it, as long as we don’t get the close below indicating supply or demand did it’s job.
What do we call the front run of a zone?
inducement
