#PriceAction
Understanding Supply/Demand vs Liquidity
Knowing what a Supply/Demand (SD) is and knowing how to use them are different. Small writeup to provide clarity, to my perspective.
Small write up to cover:
- Improper use of SD
- Suggested Use of SD
- Conclusion
Improper use of SD, to my perspective.
Price always has an objective. When you have 2 swing points/liquidity pockets we are moving from one end to the other.
Mocking up SD levels between those 2 points will more then likely invalidate as price has decided it will engineer stops
Suggested use of SD levels, to my perspective.
Normally how I mark up SD areas are at the bottom of a range/bottom-top of liquidity points. As price taps demand/ runs a low we then move onto the next area of liquidity/supply invalidating all in-between.
Simple enough.
Conclusion:
Ask yourself what price is attracted too. If you know how to draw a certain level without context as to what the market is seeking this does not mean it will work and be applicable.
Knowing levels vs using judgement come into play.
Context is key.
End.//
