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, which is why it’s essential for every trader (especially a beginner) to grasp the concept first. We at Set & Forget can help you learn Forex trading step by step.
The monthly demand level around is in control. Long-term shorts are not allowed. We expect the GBPUSD Forex cross-pair to rally from that monthly demand imbalance, but it will take some time. It will probably drop lower and penetrate the imbalance deeper down to the distal line at A and, from there, start to rally again strongly as many other pound cross pairs in a similar scenario with bigger timeframe demand levels in control. No matter how much bad or good news is created with the Brexit problem, supply and demand imbalances rule and control the markets because they are created by institutions and professionals, not by retail traders. We expect a reversal from that GBPUSD Forex cross-pair monthly demand and new weekly and demand imbalances on the way up. Long-term long bias, probably in a couple of months.
Price action is the only non-lagging indicator that exists. If GBPUSD monthly candlestick closes today at 1.2500, it 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 the last impulses are about 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.
As we look at the GBPUSD monthly chart below, we can see that the last bullish impulse that started last September 2017 at  has been stronger than the previous bearish impulse at [B] from last May/June 2017. It took a while, but the GBPUSD Forex cross pair has returned to the origin of the move drawn in blue around 1.25. Whether you are a swing or a day trader, learning that a big timeframe demand level has gained control should trigger all kinds of alarms. Going short is a lower probability when a bigger timeframe demand imbalance has gained control. See GBPUSD Forex’s major monthly chart below.
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 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 lose their money because they do not have a Forex trading strategy that combines price action and supply and demand. Supply and demand rule the markets and our lives. We are great supply and demand buyers and sellers in our lives when we purchase a new car or 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, pay attention to 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 Forex is a highly 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 in markets such as Stocks, Forex, Futures, ETFs, Commodities and Options. You can learn how to trade supply and demand zones to locate the correct zone and plan your stock options with us.
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