#1

Type of SD levels: Extremes (valleys and peaks) versus

Continuation Patterns (CP)
27th September 2013, 05:50 PM
There are only 2 types of supply and demand imbalances.

There are many nuances that you need to learn through practice and a lot of screen
time. There are as many nuances as different brands of cars are... BMW, Ford,
Mercedes, Chrysler, Chevrolet, they all have different colours and shapes, but they
all are cars. Same applies to the 2 types of imbalances.

Imbalances and different cars brands

How do you think you are able to make out the differences between different Ford
models? Because you've seen so many in your life (you may have own a couple),
you were interested in those models, you read about them, you read articles on car
magazines, TV ads... your brain is used to seeing them, so you can differentiate
between almost identical models.... Trading is the same, any learning is the same,
practice is needed.

1- PEAKS & VALLEYS

Best at the extremes of the curve or close to it. These swings are normally
reactions to previous levels, either another valley/peak or a continuation pattern.
Most of the time a retest of a swing will be in reality a second pullback to the level.

• Rally-Base-Drop
• Drop-Base-Rally

A zone's basing candles can be easily identified by using Rectangle Reader

indicator and the fractal dots indicator (Bill Williams). This fractal indicator
draws small dots at the lows low and lowest high of the candle, it requires a V or
inverted V shape with 2 candles making a higher low to the left/right of the candle
or making lower highs for the opposing zone.

2. CONTINUATION PATTERNS (CP)

• Best for momentum when trading with the trend

• Low odds when the Trendline is broken on the TF it's been drawn
• Low odds when price has been running for a while and more than 3 CPs
have been formed in a row
• High odds at the beginning of a trend change or reversal or after a WoW
trade that goes with the bigger picture's trend and momentum

Sensitivity: Internal document for Union Bank

 • Rally-Base-Rally
• Drop-Base-Drop

The strongest form of demand is a level with a gap.

A gap stands for an extreme imbalance, too much buying pressure to get buyers
filled until higher.

Always draw the zone that is right below/above the gap, not the zone right before
it. The origin of the imbalance is always at the origin of the gap

Sensitivity: Internal document for Union Bank

 The first thing you want to do is become an expert locating these kinds of levels on
any price chart, be it on a H4, a D1 or a H1 timeframe. It's just the same because
price is fractal, whatever structures, and patterns there are, you will see them on all
timeframes. Many say that drawing the levels correctly can be "considered an art";
it takes time, so be patient, your mind and eye need training, and lots of screen
time till it becomes second nature to you. How far back in time do I need to go in
order to find supply and demand levels? As far as you need to, days, weeks,
months, or years!

How do I draw a level in a consistent and mechanical way?

A level is composed of two features or prices:

1. The proximal line. The price closest to current price

2. The distal line. The price further away from current prices Both prices can be easily
identified on a price chart thanks to the indicators we use, they draw price labels for both lines as well as the width in
pips for any level

Sensitivity: Internal document for Union Bank