How to trade Forex currency pairs using supply and demand imbalances Forex currency pair using supply and demand imbalances

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Ever wondered how to trade GBPUSD Forex currency pair using supply and demand imbalances? It is imperative to understand why and how currency pair moves for the development of each Forex trader. Typically, price moves owing to supply and demand imbalances; and which is why, it’s essential for every trader (especially beginner) to grasp the concept first. We at Set & Forget can help you learn Forex trading step by step.

Price action is the only non-lagging indicator that exists. If GBPUSD monthly candlestick closes today at 1.2500, it just cannot un-close tomorrow at a different price, it’s simply impossible. When using lagging indicators, such as moving averages, Bollinger bands, MACD and the like, they change their previous appearances depending on how strong or sharp previous moves have been.

Our Forex trading strategy is based exclusively in the use of new supply and demand imbalances. There are different ways to locate these imbalances on a price chart. Locating the price levels, where the underlying Forex cross pair is mostly out of balance is easy if you know how to read price action. It’s all about how strong or weak last impulses are in relation to the new ones. The fight between impulses creates certain price action appearances that tell us that the underlying Forex cross pair is potentially creating a new imbalance.

Learn how to trade Forex using supply and demand imbalances

As we look at the GBPUSD monthly chart below, we can see that the last bullish impulse that had started last September 2017 at [1] has been stronger than the previous bearish impulse at [B] from last May/June 2017. It took a while though but GBPUSD Forex cross pair has returned to the origin of the move drawn in blue around 1.25. Whether you are a swing trader or day trader, learning that a big timeframe demand level has gained control should trigger all kind of alarms . Going short is lower probability when a bigger timeframe demand imbalance has gained control. See GBPUSD Forex major monthly chart below.

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Price action goes hand in hand with supply and demand, because every imbalance is made of price action and impulse. Your experience and screen time will help you locate these imbalances that have been created by professional investors. Retailers will usually be on the wrong side of the market, filling the order of the professional investors that know what to do in the markets. Their job is to make money. Most retailers will end up losing their money because they do not have a Forex trading strategy that combines price action and supply and demand. Supply and demand rules the markets and our lives. We are great supply and demand buyers and sellers in our lives when we purchase a new car or a new computer, but when it comes to the financial markets, we do exactly the opposite.

If you want to learn how to trade Forex currency pairs, make sure you are paying attention at the strength of the impulses and where these new imbalances are created. Do not ignore them.

It’s not easy though, but not impossible to recognize the supply and demand imbalances while trading. Did you know that Forex is a high liquid market and there’s nothing that influences it more than the market makers themselves. Join us and learn how supply and demand imbalances can be wisely utilized on markets, such as Stocks, Forex, Futures, ETFs, Commodities and Options. With us you can learn how to use supply and demand zones to locate the correct zone and plan your stock options.

 

Alfonso Moreno
Alfonso Moreno
Full time trader, expert technical analyst and founder of Set and Forget supply and demand online trading community. Traveler, photographer and adventurer.

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