How we determine if a zone is of high reaction, and of tradeability of the zone.
Prices move by forces, THESE FORCES ARE SUPPLY AND DEMAND, the greater the supply and demand, the greater the price movement.
This is why, in a consistent and mechanical way, identify the levels of supply and demand imbalances, which will be the areas where the large movements caused by large institutions will begin.
A strong movement from the area means that not all orders were completed. For example, a big upward movement is caused by huge amounts of orders, the price goes up, but not only all the orders are placed since the goes up and the institutions want to buy at a lower price, but the price was driven up. , they will wait for the retracement to return to complete their orders at the same purchase price. While traders who do not know about supply and demand are selling on the back, the institutions are preparing their last orders to the rise.
The smartest thing to do is buy at the cheapest prices and sell at the most expensive prices (range of supply and demand).
When you open any graph you will begin to identify a number of supply and demand areas, but this does not mean that we are all interested in them. Our rules will help us consistently and methodically to identify these areas that do interest us.
2: 1 IMBALANCE in the movement: this means that the movement must be at least 2 times the size of the base. You can choose the R / R you want, it can be 3: 1 2.5: 1
COOL AREAS cool areas are more likely.
STRENGTH OF THE ZONE: The further away the price of the zone moves much better.
R / R for profit 1: 3 if there is no possibility of generating profit at least 3 times higher than your risk, it is better to ignore this zone. Recommended 1: 4
What the area has achieved.
If you are in favor of the trend in the greater temporality.
If it is attached to a cool area in a longer period of time.