Advanced
What Are Demand And Supply Flips?
Demand and supply flips will be an indication that the market is switching form supply exceeding demand to demand exceeding supply and vice versa.
Why are Demand And Supply Flips Important?
Demand and supply flips are important because it will be one of the clues to figure out if the market is switching structure. As you may have seen, it may be confusing to tell when the market is breaking structure or just giving a structural inducement. Well a supply and demand flip will be one of the three ways you can decipher if the market is switching structure or giving an inducement.
How To Spot Demand And Supply Flips
Demand Flips
When supply is exceeding demand, there will be a supply zone that creates the most recent low. this supply zone will be your main focus. A demand flip will occur when price comes back into supply and then fails to make another new low. Price must reject/bounce from the supply zone, fail to make another new low (relative to the low that the supply zone created) and then make a new high. Price must eventually rise higher, breaking above the supply zone. Once price does this, a demand flip has occurred and demand in now in control. demand is exceeding supply. From here, the demand zone that made the new high will be your focus. This is the demand that made a new high right after supply failed to make a new low. There will be multiple supply and demand zones but your main focus will be the ones that make new highs and lows. This is not to be confused with structure.
Supply Flips
When demand is exceeding supply, there will be a demand zone that creates the most recent high. this demand zone will be your main focus. A supply flip will occur when price comes back into demand and then fails to make another new high. Price must reject/bounce from the demand zone, fail to make another new high (relative to the high that the demand zone created) and then make a new low. Price must eventually drop lower, breaking below the demand zone. Once price does this, a supply flip has occurred and supply in now in control. Supply is exceeding demand. From here, the supply zone that made the new low will be your focus. This is the supply that made a new low right after demand failed to make a new high. There will be multiple supply and demand zones but your main focus will be the ones that make new highs and lows. This is not to be confused with structure.
Demand And Supply Flips From A banks perspective
demand Flip
When a demand flip occurs, it is telling you that the buyers have gained control and demand is now exceeding supply. If the sellers were still in control, there would have been protecting the supply zone by not allowing price to go past it.
supply Flip
When a supply flip occurs, it is telling you that the sellers have gained control and supply is now exceeding demand. If the buyers were still in control, there would have been protecting the demand zone by not allowing price to go past it.
Invalid Demand And Supply Flips
Invalid Demand Flip
An invalid demand flip will not follow the three rules. The most common invalid demand flip will not include price failing to make another new low. Many times when price comes back into the supply zone, price will not reject and fail to make another new low. Price will simply drive straight up breaking above the supply zone.
Invalid Supply Flip
An invalid supply flip will not follow the three rules. The most common invalid supply flip will not include price failing to make another new high. Many times when price comes back into the demand zone, price will not reject and fail to make another new high. Price will simply drive straight down breaking below the demand zone.
