Supply N Demand - Compression

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IfmyanteCompression


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NOE: All the credit goes to I, R, H, , and the other great people who have contributed; on the other hand, all errors are mine,so ell ree to pm me on Forexactory i you find mistakes, bugs, or i you have suggestions or ideas.

Please remember that the charts and the concepts presented here are just a quick introdution to Price Action. You can consider all this as a brie introduction

to a bigger story, a story that we know as Price Action. I you wonna learn more about Compression, about Price Action, visit the RedEmpire threads onForexactory.

Price is everything

Price is everything Chat Room

Romancing the price

Intro

Credits and resources

click on this

symbol to see

multimedia contents.

TIPS

and pay attention to this great resource:

A NEW USEFUL SITE FOR TRADERSWHIT A COMPLETE TRADING COURSE FROM IFMYANTE


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A - as a prefix - AscendingAA- Adam and AdamACH - Ascending ChannelAE - Adam and EveAWG - Ascending wedgeBE - Break evenBE - As a prefix - Bearish, exam-ple: BEACH - Bearish ascendingchannelBEB - Bearish engulfing outside

barBEFL - BearflagBH - Bar highsBNR - Bump and runBO - BreakoutBOPA - Breakout, pullback andadvanceBOPB - Breakout + pullbackBR - as a prefix - BroadeningBRN - Big round numberBU - As a prefix - Bullish

BUB - Bullish engulfing outsidebarBUFL - BullflagCH - ChannelCN - ContinuationCP- CompressionCWH - Cup with handleD - DemandDBB - Double Bottom

DBD - Drop base drop, descen-ding pole flag poleDBR - Drop base rallyDBHLC - Double Bar high lowercloseDBLHC - Double Bar low highercloseDB - Double topD1 - DailyDD - Drawdown

DM - DiamondDIV - DivergenceDS - Daily supplyDS - as a prefix- descendingDSCH - Descending channelDSWG - Descending wedgeDL - Demand trend lineEA - Eve and AdamEE - Eve and EveEX - ExhaustionFL - Flag / Consolidation

FO - FakeoutFA - First trouble areaFB - First time back. Followedby 2B, 3B etc.HB - Horn BottomsHNS - Head and shouldersH - Horn topsHF - Higher timerameHFL - High and tight flag (ama-

zing results!)IB - Inside barIb4 - Inside 4 bar that is the smal-lest bar o the previous 3 barsILR - Island reversalINV - InvertedLIL - Long islandLF - Lower timerameM1 - 1 minuteM2 and so on

MMD - Measured move downMMU - Measured move upMN - MonthlyPA - Price actionPB - Pin barPFP - Pole, flag, polePIE - Price Is Everything threadPPZ - Price pivot zoneRN - Round numberRBD - Rally base dropRBR - Rally base rally, ascending

pole flag poleR - Retrace/RetracementRP - Romancing the PricethreadRV - ReversalS - SupplyShampoo - see HNSSL - StoplossSR - Support/resistance

SRF - SR FlipSL - Supply trend lineG - argetL - rend lineP - ake profitPP - ake partial profitR - riangle - ouch tradeWB - weezer bottomsW - weezer tops

W1 - WeeklyWD - Weekly DemandWG - Wedge

Abbreviation


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o understand exactly a scenario, or indeed to read any situation at all on the charts, past present or uture,you should look or a certain set o clues.

General: HF. Know where price is coming rom and going to, and the PA past and present in all the Fs, rom the Monthly down.

Specific:At the zones you want to trade, look to

Past: study the zone in al l Fs, down to M1 ask yoursel

Where were the decisions made? Clean S/D? Mark these lines. No clean S/D? - compressed zone

Did price really shoot away orm the zone, or did it CPaway? Did the zone itsel react at the right place? Look beyond the zone urther into the past. See what it reacted to. Was there a better S/D nearby that price

wants to visit? Tis explains many akeouts.

Present:Approach. How is price returning to the zone?Where's the nearest flag in the F you want to trade? Tis is your tg1 in this F. Flags in the LFs? What does PA tell you?Has price tested the last flag on approach? (good sign)Has price compressed into the zone in this F or LFs? (good sign)Is there big news on the way? Has there just been big news?

Reaction:In LF, does price react violently to the first decision point? Does it quickly engul the nearest S/D? (good sign)Does price simply CPaway? Maybe it wants to go to the next decision pointI the first decision point breaks, watch the signs on approach to the next, and, o course, reaction.

Ante

Party*

* Past, Approach, Reaction, Tank You!


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denition

We talk about compressionwhen price taking out last decision point and the orders that where lef there.

by Ifmyante


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charts


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Lets put an end to whats compression ( otherwise known as a finishing triangle ) and what not compression. Noticed some conusing comments and chartslately with regards to compression. So, below is an entry rom the past to clearly identiy the PAFirstly, we look lef and notice a supply zone - supply zone identied simply by noticing prices ell hard rom there beore, thereore sellers exceed buyers.

Now we wait or PRICE ARRIVAL

Compression

an explanation by Red*

* As i know, Redwas the first who have talked about CP, so all the credits goes to him. Ten, why dont put his charts firstly ? Because his audience on PIE was generally skilled, he wastalking to expert t raders, that dont need so much explanations. On the other hands, the charts o Imyante and the charts presented here are more noob proo, so study on them beoreall. In detail, seems that the spiking is the most complicated part o the story or inexperienced trader. Where the hell are the spikes ? I dont see any spikes on your chart was my firstquestion to Imyante; well, remember that you have to understand the dynamics o price in LF that produces the spikes on the HF, and never ever orget that candles are just a repre-sentation o what happened to price over a given time - your broker time, not the PA itsel, so always looks at the dynamics o the PA, and remember what CP represent: price taking outlast decision point and the orders that where lef there.


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.......... ok, now price arrival to zone. But notice the manner in which it approaches - its spiking south WHILS RISING .......... what does this mean?Rising to find supply, spiking south is doing several things @ the same time. Prices are finding small pockets o demand and testing them to r ise to supply. So,as its spiking south its also consuming those small pockets o demand thereore the path south is begin cleared o demand @ the same time!


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PA watch and entry, ok now look @ the result. Notice how the bears that dropped through the compressed zone are large and clean suggesting no demandor resistance, reason? - the demand was already consumed by the SPIKING SOUH ON APPROACH O SUPPLY ZONE ............. this is why l havestated ofen - PRICES HINK AHEAD OF IME, prices already decided to turn because prices cleared the zone o demand by spiking south beore they

reached supply clearing the path south or the bears........... so there it is.


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another example - some o you have been conusing flags or compression. Why does a BULLFLAG DIP? Its dipping to consume sellers @ a given level, oncethe sellers have been consumed, the flag is complete and prices can advance - no mystery. Ten prices leave the flag to advance, then once prices reachedsupply, the approach to the zone there was compression, so l sold it


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a video

A quick video on CP and the importance o finding the Drop Base Rally that creates an SR flip.

by Ifmyante


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study on breackoutPrice compresses up/down then pulls back rom hitting a resistance/support|sup/dem and balances out beore an advance in the compressed direction.Te res/sup|sup/dem usually comes rom a higher F.. this would normally make me biased or a reversal.. but when you watch the PA unold you see thatactually price wants to carry on.. also keeping in mind o where price came rom. For example, i price has only just lef a 4H demand zone and it hits 30Mresistance.. the likely scenario here is that the 4H demand is more powerul and will break the 30M resistance.

Tese are some structures that I have ound to have happened in example o this scenario.

by Tyoon


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A note o I: I price flags atop a cp zone, nothing is valid 'til the flag breaks, one way or the other.


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[22 May 2012]

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Supply N Demand - Compression

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