We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • What is the top market moving theme for the coming week? I disagree with the majority. '$EURUSD, $GBPUSD and $AUDUSD Top Volatility Candidates With #Fed, #Election, #TradeWar' https://www.dailyfx.com/forex/video/daily_news_report/2019/12/07/EURUSD-GBPUSD-and-AUDUSD-Top-Volatility-Candidates-On-Fed-Election-Trade-War.html?CHID=9&QPID=917719 https://t.co/Q1dbZVN5Us
  • The Australian Dollar was focused on its home country in the past week, but that is likely to change sharply in the days ahead with major global risk events coming up. Get your $AUDUSD market update from @DavidCottleFX here: https://t.co/yZz3hCyVMx https://t.co/1xw1JHwd7l
  • The #Euro broke chart resistance, threatening to challenge the bounds of its longer -term downtrend against the $USD. Bulls may find it premature to celebrate however. Get your market update from @IlyaSpivak here: https://t.co/VfR13llYbW https://t.co/LiWTvIygxc
  • The $USD appears to be stalling against the Singapore Dollar, Malaysian Ringgit, Indonesian Rupiah and Philippine Peso, but technical analysis may still favor USD strength. Get your market update from @ddubrovskyFX here:https://t.co/AZp98MoXKo https://t.co/jgZMUFVGJB
  • The Indian Rupee soared after the Reserve Bank of India surprised with a rate hold. $USDINR may climb as support reinstates the uptrend ahead of Indian CPI and global trade tensions. Get your market update from @ddubrovskyFX here:https://t.co/QEOabsDfMn https://t.co/rqn8Zjrvkv
  • #Gold closed lower after paring early-week gains post-NFP on Friday. But will price finally break support? These are levels that matter on the $XAUUSD weekly chart. Get your $gld technical analysis from @MBForex here: https://t.co/RILBGhLAQZ https://t.co/q5znMUlEQA
  • German Bund Yields Update: 2-Year: -0.639% 3-Year: -0.651% 5-Year: -0.548% 7-Year: -0.480% 10-Year: -0.290% 30-Year: 0.228%
  • The $AUD erased half of November’s down move in a mere two days but the dominant trend bias continues to favor weakness ahead. Get your market update from @IlyaSpivak here:https://t.co/ShYksfNXyS https://t.co/OVhyNgLRn5
  • We were almost there, but the $SPX fell short of a >1.0% daily change. That raises the tally to 39 consecutive trading days without a climb or fall of even a moderate measure https://t.co/ibt82dBGmh
  • En español: El oro tropieza y se precipita en caída libre. ¿Qué explica las pérdidas del metal dorado y la alta volatilidad en los mercados financieros? #XAUUSD #trading $gold https://t.co/Hdsd0z1qih https://t.co/WKnGaABVS8
Supply and Demand vs Support and Resistance

Supply and Demand vs Support and Resistance

2019-10-21 13:12:00
Warren Venketas, Markets Writer
Share:

Supply and demand and support and resistance have a lot of similarities, but the aim of this page is to distinguish the two and identify how you can use support and resistance to trade supply and demand.

The differences between supply and demand vs support and resistance

Support and resistance is a level where traders see a lot of failed attempts at which price cannot surpass - this idea is familiar to most traders.Supply and demand is a much deeper zone which represents regions of key price levels of broad support and resistance.

Supply and Demand

Support and Resistance

Represented by a broad price region

Defined by a key price level

Easier to find trade entries

More difficult to base trade decisions

How to use support and resistance to trade supply and demand

Trading Supply and Demand

The first thing traders need to do before placing a trade based on supply and demand is to decide whether the environment is expected to stay the same or to rapidly change. This can be assessed by market volatility measures such as significant political strife or economic news. This is the dichotomy between the decision to trade for a range or trade for a breakout.

Trading the Range

When trading a range, traders are anticipating the environment to stay about the same; with support or resistance standing its ground allowing for traders to ‘buy low,’ and ‘sell high’. The chart below illustrates how a trader can use price alone to identify those points in the market at which demand begins to outstrip supply (creating increased prices) or supply begins to overrun demand (creating decreased prices).

Trading the range with a GBP/USD chart

trading the range with support and resistance

Trading the Breakout

The other side of the coin is the trader that is expecting the environment to change, with breaks of support or resistance to create new highs or new lows.

With this style, the trader’s objective changes from the range-bound condition. The goal is now to ‘buy high, and sell back at a higher price,’ or to ‘sell low and buy back to cover at a lower price.’

Trading the breakout with a EUR/USD chart

trading the breakout with supply and demand

Since these environments can be considerably more chaotic than what might be expected in ‘ranging’ markets, traders are usually best served by altering the risk management condition to account for the increased risk of trading in a rapid market. For more information, read our guide to forex risk management techniques.

Read more on support and resistance and supply and demand

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.