Rally base drop, drop base rally, support and resistance, Fibonacci, Elliot Wave, and so much more… There are thousands of different theories used to try and figure out where price will turn in a market, and where it will go. What makes Online Trading Academy different is that we don’t subscribe to anything related to conventional technical or fundamental analysis. Our trading lessons are focused on something totally different for a reason. We ignore conventional analysis theories simply because they are very flawed and why not go straight to the truth?
Truth is, market prices move because of an ongoing, very qualifiable supply and demand equation. Price movement occurs when this simple and straight forward relationship is out of balance. This supply and demand imbalance is what our trading lessons are based upon. To explain, let’s look at a recent trade in the NASDAQ that is also a page right out of our new Core Strategy Course, to help share the picture that represents real supply (or demand) in a market.
Recent NASDAQ Day Trade
Notice the pattern, Rally – Base – Drop. This is the picture of supply that helps you be a willing seller high up on the supply and demand curve. With any picture of supply, you need to make sure it is very “fresh” meaning there are still significant unfilled sell orders in that area (price level). The short entry once the picture above is produced is to short a rally back up to that supply level like I did in the trade above. The initial “drop” from the level tells us supply exceeds demand in that area. We sell short at the proximal line with a protective buy stop just above the distal line and that’s the sell setup.
Keep in mind that a key trading lesson in the course deals with the ever important “Odds Enhancers” which are the filters that helps us identify the best levels with the strongest supply and demand imbalance. Make sure you understand those before trying this at home. Going through this simple checklist helps us identify where banks are buying and selling in markets so we can buy and sell there too.
One of the most important trading lessons you can learn is that this is not about taking many trades in a day or session, it’s about taking the low risk, high reward and high probability ones that meet our simple criteria. There is nothing fancy about this, no indicators or oscillators or conventional chart patterns. There are not many different strategies, there is simply one that we have patented. Buy where banks and financial institutions are buying and sell where they are selling. Another way to say that is, buy where the smart money is buying and sell where the smart money is selling. The purpose of this article was to help you identify what the picture of that looks like on a chart. Of course, the Odds Enhancers help this process immensely and are key to identifying the key levels.
Hope that was helpful, have a great day.
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Editors’ Picks
EUR/USD eases below 1.0850 on renewed USD strength
EUR/USD stays under pressure and trades in the red below 1.0850 in the European session. Although the ZEW survey for Germany and the Eurozone showed a noticeable improvement in economic sentiment, broad USD strength doesn't allow the pair to gain traction.
GBP/USD drops below 1.2700 on notable US Dollar demand
GBP/USD is extending the downside below 1.2700 in the European trading hours on Tuesday. The ongoing bullish momentum in the US Dollar, despite sluggish US Treasury bond yields, undermines the pair. Mid-tier US housing data are coming up next.
Gold price struggles to lure buyers, holds steady above one-week low ahead of FOMC meeting
Gold price ticks lower amid reduced Fed rate cut bets, elevated US bond yields and stronger USD. Geopolitical tensions could lend some support to the safe-haven XAU/USD and help limit losses.
Why is the crypto market crashing?
The two most important contribution to the ongoing bull market is the meteoric rise in Bitcoin due to the ETF approval and the sudden interest spike in Solana ecosystem. But the recent move suggests that the upward momentum is dissipating and a correction looms.
Canada CPI Preview: Inflation pickup could scale back bets on early interest-rate cut
The Canadian Consumer Price Index is expected to have risen by 3.1% YoY in February. The BoC shows no rush to lower its interest rate. The Canadian Dollar maintains its multi-day lows against the US Dollar around 1.3540.
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