Balhana Journal.pdf

Supply/Demand A supply zone is where it was decided that price was too high. A demand zone is where it was decided that price was too low. We know any cluster (consolidation) on any time frame is a balance between buyers and sellers. When one side is exhausted, then it will break one way or the other. If there is a cluster followed by a strong breakout candle (a.k.a. momentum candle or pole), the cluster is now defined as supply/demand zone where it was decided that price was too high (supply) or too low (demand). Some S/D traders define certain candle wicks as supply/demand. Let's take DHC (daily highest close) as an example. DHC could be defined as supply because price failed to close above, which means this is the level where people think price is too high. Reversal Supply/Demand Zones

1) Drop-Base-Rally (DBR) Demand Zone

2) Rally-Base-Drop (RBD) Supply Zone

As both of the above are ‘reversal’ zones they represent a directional shift in the supply/demand imbalance.

Continuation Supply/Demand Zones 1) Drop-Base-Drop (DBR) Supply Zone

2) Rally-Base-Rally (RBR) Demand Zone

As both of the above are ‘continuation’ zones they represent a brief balance before another imbalance in the same direction of the preceding trend.

Abbreviations • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2BR 3DD 3DU 3T BEEB BUEB BEOB BUOB BOPB BT CP DC/PB DBD DBR E/PB ES FB FTB PB QM RBD RBR SC/PB SD SP SR TP WE

2 Bar Reversal (2 Bar Pinbar) 3 Drives Down 3 Drives Up 3 Taps into SD Bearish Engulfing Bar Bullish Engulfing Bar Bearish Outside Bar Bullish Outside Bar Breakout + Pullback Bull Trap or Bear Trap Compression Demand Consumption/Pullback Drop-Base-Drop Drop-Base-Rally Engulf/Pullback Engulfing Symmetry False Breakout First Time Back Pullback Quasimodo Rally-Base-Drop Rally-Base-Rally Supply Consumption/Pullback Supply/Demand Spike Base Support/Resistance Take Profit Whipsaw Engulfing

3 Taps into SD

Bull/Bear Trap When a support level such as a swing low or a trendline is breached, the market often attracts fresh interest from buyers and sellers. The buy low crowd come in looking for value at previously cheap levels, while the breakout following crowd sell the breakout looking for an extension of the decline. If the downside break fails to see follow-through selling, frustrated short sellers cover their positions bidding the market up creating a whipsaw. The market advance is exacerbated by the 'wait and see' crowd who come in after most of the cards have been played. Some examples of the Bull and Bear Trap:

Quasimodo Refer to the website (No Brainer Trades) for more detailed information on Quasimodo (Over/Under Pattern).

Another pattern we heavily monitor, serving as an intraday price turning point. These can be very reliable if used properly and can be seen on everything from daily down to 1 min charts. The easiest way to describe this pattern is a 0-1-0 pattern, where in the case of a buy, price makes a new low; that low is taken out, price comes back up past the initial pullback from the first low, comes back down and uses the base of the first low as support. Its essentially a mutated version of the very common head and shoulders pattern, without the diagonal trendline ambiguity.

Think of it as the top of a 2 dimensional pyramid made of squares, where the blocks on the second level from the top have equal highs. In the case of a buy: 1. Price makes a new low 2. Price retraces from this low 3. Low is taken out to the downside (price extends beyond it) 4. Price comes back above the initial retracement from the first low 5. Price comes back down and fades the original swing point The reason we require, in the case of a buy, a higher high on the second retracement, is to disqualify the current downtrend, and initiate a price reversal. Without the higher high, market participants could easily view the current price action as nothing more than a bump in a downtrend, as opposed to a reversal. Reverse this logic for sells. Like anything else I list here, these are nothing more than patterns that repeat themselves all the time, and some of you might be aware of this one already. They key is to identify, and most importantly, react to them, when the opportunity arises.

3 Drives Up/Down EUR/JPY 4H "3 Drives Down"

EUR/CAD 4H "3 Drives Up"

JOURNAL

Whipsaw Engulfing [Bearish Whipsaw Engulfing] 1. 2. 3. 4.

Cluster (where supply and demand are balanced) near supply. Cluster resolves north and becomes demand. Many novice breakout traders go long without knowing that they are going right into supply. Cluster is engulfed south by big sellers in supply. Ignored cluster now becomes supply. Need to go short when/if price retraces to cluster. You may find DBD in Sell Zone in lower timeframe to refine your short entry.

Bear Trap + TL

Spike Base Pattern

BT- DC/PB, Pinbar

BT - DC&PB

DC/PB - PB Base

Engulf - Strong PB

E/PB

E/PB + BT + QM

BT + E/PB + CP

E/PB

CP

BT + CP

E/PB+CP

Bull/Bear Trap (6) - QM

Hidden Multiple Demands

Bull/Bear Trap (5) - Spike Base + CP

Bull/Bear Trap (4)

Compression (1) (by Redsnow) Right, lets put an end to whats compression ( otherwise known as a finishing triangle ) and what not compression. Noticed some confusing comments and charts lately with regards to compression. So, below is an entry from the past to clearly identify the PA

Firstly, we look left and notice a supply zone - supply zone identifed simply by noticing prices fell hard from there before, therefore sellers exceed buyers. Now we wait for PRICE ARRIVAL

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

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 demand or resistance, reason? - the demand was already consumed by the SPIKING SOUTH ON APPROACH TO SUPPLY ZONE ............. this is why l have stated often - PRICES THINK AHEAD OF TIME, prices already decided to turn because prices cleared the zone of demand by spiking south before they reached supply clearing the path south for the bears........... so there it is

another example - some of you have been confusing flags for compression. Why does a BULLFLAG DIP? Its dipping to consume sellers @ a given level, once the sellers have been consumed, the flag is complete and prices can advance - no mystery. Then prices leave the flag to advance, then once prices reached supply, the approach to the zone there was compression, so l sold it no mystery, nothing random whatsoever

Bull/Bear Trap (3)

Bull/Bear Trap (2)

Bull/Bear Trap (1)

No higher high, so it's not standard QM, but I think it could be a tradable setup with a reversal PA in lower timeframes.

Balhana's bull/bear trap setups