As mentioned in previous supply and demand technical analysis. When trading supply and demand imbalances we don’t really need any indicator or add-on tools to tell us how and when to place a trade. Let’s take a look at Tiffany & Co. stock #TIF using supply and demand imbalances as technical analysis without using a single indicator dragged on the chart, just price action and impulses.
When looking at the monthly chart, it’s clear there bearish impulses are stronger than the bullish impulses. These impulses have created a brand new monthly supply imbalance around $121 per share. Unfortunately price has not rallied there yet and dropping strongly. The bias is shorts right now since bearish impulses are stronger than bullish impulses. You can used these impulses and use other trading strategies to take shorts on the way down, or even use options strategies to take long puts on the way down. See monthly chart below with the monthly supply imbalance drawn around that price area. If you want to learn how to trade stocks supply and demand imbalances join our supply and demand course
Price did not retrace to that monthly demand zone around $121 because there was a very strong obstacle on the way up in the shape of a super strong weekly supply imbalance around $110, and guess what? Price is reacting sharply to that imbalance on the weekly timeframe. If you want to learn how to locate these turning points in the market that eventually become imbalances that can be traded join our stocks trading course.
Supply and demand trading does not require the use of any indicator, it’s a “simpler” trading strategy that will help you learn how to trade stocks and Forex without being in front of your trading platform all day long.
A bit on information about Tiffany & Co company. Tiffany & Co., through its subsidiaries, designs, manufactures, and retails jewellery and other items in the Americas, the Asia-Pacific, Japan, Europe, and internationally. The company offers jewellery collections, engagement rings, and wedding bands. It also sells watches, home and accessories products, eye wear, and fragrances; and wholesales diamonds and earnings. The company sells its products through retail, Internet and catalogue, business-to-business, and wholesale distribution channels. As of January 31, 2019, it operated 124 stores in the Americas, 90 stores in the Asia-Pacific, 55 stores in Japan, 47 stores in Europe, and 5 stores in the United Arab Emirates. Tiffany & Co. was founded in 1837 and is headquartered in New York, New York
Trading supply and demand imbalances is ideal for beginners and those with a full or half time job, you won’t need to stay in front of the computer all day long trying to move price action with your mind.
As supply and demand traders, we do not need to pay attention to the news, fundamentals or any earnings reports. Once a big timeframe imbalance has gained control, earnings do just the opposite and reacts strongly to those imbalances. Why is it that you see positive earnings and then the underlying stock drops like a rock, or a negative earnings announcement and the stock rallies like a rocket out of control? You are probably missing the fact that there are big imbalances gaining control.
Unless you are doing very short term trading and scalping, you should not worry about fundamentals or earnings announcements.
You can use these imbalances to plan your trades in lower timeframes. Trading is just waiting for the right trigger points and scenarios to present themselves, this game has got a name and it’s called the waiting game. We need to patiently wait for the correct scenarios and setups to happen and wait for price to pullback or dip into the price levels we want to trade, in our case these price levels are made of supply and demand imbalances.
There are several ways of buying stocks. When trading stocks, you can buy shares of the underlying stock or use options strategies to go long or short at these specific supply and demand levels, long calls or long puts or spreads. You can even buy a CFD (contracts for difference) if you are in a country where it’s allowed.
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