 Hi, my name is Leon Roe, Covenancy Trader and Trading Coach at Trading180.com and welcome to this week's Supply and Demand for us Technical Analysis. It's a brand new year. Happy New Year to you all and I hope you all had a great Christmas and New Years. So finally back to the charts and it's been a while. I took the Christmas off and New Years so back to the trading and we're starting off this year with a bang really. Starting off in the fundamentals and sentiment we've got the headlines really is about Iran and the US killing the commander, one of the commanders from Iran, Qwaseem Soleimani, I think that's how you pronounce his name and potentially what we could have is escalating tensions, potential war worst case scenario in that region. So what we have going on is a flight to Safehaven. So Safehaven in Covenancy Land is the Japanese Yen and the Swiss Frank. So the money and the investors are really going into the Safehaven assets at the moment and if you want to know what basically Safehaven assets are, risk on and risk off, I'll put a link to the Investopedia education site and risk off is pretty much explained here but what risk off behaviour really is when there is a tension, uncertainty in the markets then basically investors will put their money into Safehaven assets like gold, government treasury bonds as well as Safehaven currencies like the Yen and the Swiss Frank. So you can basically see what's going to be happening on a price chart as far as where the money is potentially going this week and into the potential future if this carries on. But looking at the week ahead, the economic calendar fundamentally it says on trading economics which is a great site. Usually this daily will be busy in the coming week as the US release its December jobs report alongside foreign trade data and ISM non-factual PMI elsewhere. Important there to follow include China services, PMI, consumer and producer prices. Eurozone inflation that's very important because the Eurozone and the European Central Bank are trying to achieve their 2% inflation target and they're really quite far away from that so depending on where inflation comes in will determine their monetary policy. Germany factory orders that's important as well because Germany are Europe's powerhouse and if Germany are slumping regarding their economy then it affects pretty much the rest of Europe. Japanese markets are open on Monday as investors return from New Year's holidays so we're back to pretty much to normal come Monday fundamentally. So let's look now at the technicals and what I'm going to do as we've got a brand new year I'm going to start off with brand new charts. The Dow Jones dollar index is the one I'm going to be starting off on and really going through taking my time even though my throat is recovering from a cold I'll go through this for all the new traders out there and even the experienced ones and basically how I go through plotting supply and demand zones. Normally I have these already on the charts I'm going through the analysis but I'll make the exception today as it's a brand new year so you can kind of see the fork process behind this. Also as well if you don't understand this is not value-based drop, drop-based value this is higher highs, higher lows, lower highs, lower lows and proof of value trading. You can watch some of my YouTube videos on the channel Beginner's Guide to Supply and Demand as well as some other popular ones and that will basically show you how to plot supply and demand and how a plot supply and demand so you may want to check that out before you watch this video and then you know just come back and have a look and you'll understand a bit better what exactly I'm talking about when I plot my demand and supply zones. So Dow Jones dollar index we had a bit of a set off over Christmas which was pretty much predicted but also as we're buyers or I'm a buyer of the dollar I just look for a buying opportunity really down here not necessarily on the dollar index but looking for confluence so the dollar index is pretty much a measure of dollar strength against major currencies like the euro, yen, pound and also the Aussie. So if we were looking at any kind of demand zones where the price was potentially going to come down into that would have been a demand zone right there. So we've got the last bearish candle there before prices make a new high you've got higher highs higher lows you've got move up move down move up there we go. So that's why I'm drawing that there you also have yeah I think that's about it for now. So yeah that zone you got some zones below it but don't really need to kind of draw them at the moment it kind of clutters the chart a little bit or I can just basically drag that down to here and then there's another one right here you've got a bit of a demand zone right there right in that zone there and again why is that? It's because you've got this is the last bearish candle before prices make new highs right start taking out you know you've got lower highs lower lows and then you've got this move up yeah there higher highs higher lows are being made so once prices start to make these high highs higher lows that becomes an area of demand yeah so let me just delete these take these off the chart so that's demand sorted and now when it comes to supply what we've got is we've got a level of supply right here right there supply and then we've got another area of supply right here again why are these there because these are the last bullish candles before prices make new lows yeah you can see that there's supply there also here as well last bullish candle draw it from the last bullish candles open price to the high last bullish candle open price to the high again YouTube videos link is in the description box if you want to find out a bit more about how I go about plotting these zones so once we've got those two then I'm pretty much looking at maybe just looking at ranges where prices may potentially range between prices are ranging between probably that high and that low and prices are between that high and that low so the yellow lines represent 50% retracement which is fair value now depending on which one you want to be a buyer or seller of obviously we're looking to be a buyer of the dollar so anything at the lower end is going to be a bargain price for us so what we're looking for overall is pretty much maybe a pullback down into some sort of demand fresher demand potentially because we've touched this level now once twice maybe a bit fresher and then we're looking for buyer trades as far as the Dow Jones dollar index if you're looking for a sell trade then you're looking for prices to kind of come up here that would be the first bargain area for actually I wouldn't say bargain area because this is the Dow Jones dollar index you're not necessarily there's no quote currency on here but if you think that the Dow Jones is overvalued or a bit expensive I should say this area overvalued but expensive at this area it was deemed expensive in the past there was no definitely no demand there so it was expensive here so traders would pretty much not I wouldn't say dumping but they were maybe liquidating their dollar holdings so this was an expensive area buyers are buying here now you can start to see that there was demand coming into the market so in between this high and this low prices are coming here around fair value and that'd be represented as an expensive area so that's what I'm looking at and prices to contain between this high and this low so let's see what happens I'm probably looking for a bit of a pullback into this zone around here before looking at getting long on any of the dollar crosses so dollar yen so dollar yen and again going back to the risk on and risk off the yen strengthens in a risk off environment so what we have actually is we got a large demand zone right here demand demand demand right that's large demand zone because prices made a new high so you've got move up move down and then move up so that's a new high so as prices are coming back down into this zone you can see where prices have reacted once twice and once prices tend to touch demand zones more than once you know twice the demand zone is no longer you know a strong area of demand you can see pretty much here now we've come down to the lower end this fresher area of demand prices are reacting now I put out a video I think last week or the week before about catch pain relief zones in the trade setup and it was really at the bottom here now I'm interested in buying here but is it a smart move to really buy the dollar when you've got a lot of tension in the air I don't really think so so just because I have a trade setup you know there doesn't mean I'm going to necessarily enter what I may do is just sit out and wait and if prices continue to come down this will be the next zone I'll be looking for to get long again if risk on comes back in the market so let's say for example tensions you know kind of decrease and you know things are sorted between Iran and you know America then maybe if it was the open here yeah and things you know there's maybe more risk on again and you know they kind of kiss and make up as unlikely as that is then I'll be a buyer of the dollar for sure as this risk off even I want to be a buyer of the dollar what I may have to do and what maybe you should consider is maybe just entering maybe a quarter of your normal position so if you normally you know trade 1% a position then what you want to maybe look to do is you know trade maybe 0.5 sorry 0.25 0.2 0.1% just to see you know reduce your risk because we're about risk managing risk we're not about making smarter decisions we're not about just looking this based on the technical patterns alone so pretty much even though I'm looking for a buyer here I haven't seen an entry that I'm interested in and if this level doesn't work no problem I'm looking at buying down here potentially and again just understanding what the risk sentiment is at the moment with regards to the dollar and the Japanese yen sometimes we might we might have to just sit out of this and look at some other pairs to trade like the euro dollar you know the pound dollar etc from a supply perspective this is where you know the supply zone is pretty up top here so we've got some supply there and then you go back a little bit further got one right here so yeah decent yeah so right here that's where we've got our supply zones so again where price is contained between it contained between this low and this high at the moment from a value range perspective and then we've also got a range between this high and there which is basically about fair value or it's a bargain area if that's if prices are going to range between this high which they currently are that high and that low so prices may want to range like that or prices may range between this and this either way you know because my bias is for the you know to buy the dollar then that's just the way I'm going to be looking it makes things a lot easier when I'm looking to take trades because I don't necessarily have to you know always look to buy at supply so buy at demand and sell at supply and it really catches traders you know and confuses traders the next level would be a nice fair value between this low and this high if prices do come down here and again risk maybe starts to diminish a little bit and risk going starts to come back in the market that would be a nice value area to look to buy the dollar nice fair value bargain area at this 107 106 so yeah we've got pretty much those zones drawn out dollar Swiss now dollar Swiss I'm actually in this trade and this was a nice zone I'll do is I'll zoom out a little bit stop my demand zones so it's demand zone down here right there again why is that demand because you've got last bearish candle clothes before prices start to make new highs is actually hidden demand right there as well let's see yeah she touched that hidden demand zone quite nice also as well I took this based off of a CPR level I'm not going to go into it in this video but this was a nice breakout excuse my voice I'm getting over a cold at the moment so this was a nice breakout CPR so set up was pretty much here now that we've touched this demand zone right here I'm going to delete that so this is the demand zone here anyway so I'm in this trade long at the moment I can't lose in this trade now as I've taken two to one profit on one position so I'm letting the second position one so let's see what else we have from a supply zone perspective so supply what we've got is got that level there yeah so the last bullish candle before prices making new low and that's really the swing there we've got another supply zone there and bit another one there so a bit of a cluster of supply there then we've also got one at the absolute highs so we've got some lower highs lower lows being made yeah so we've got that move up move down move up down like that kind of like that yeah so lower highs lower lows being made and again when you get something like this happening you're thinking to yourself well there's a massive cluster of supply which which supply zone is going to work you know and what you do is you start to look for horizontal supply support and resistance zones because then we've got not only supply and demand traders getting in short potentially here we're going to have levels of resistance support resistance resistance support support so if prices come back up here the supply and demand equation it's starting to look a bit better because you've got a lot more confluences within this area it's a wide area of supply and the same way you've got decent support and resistance within that area there that price zone there where you've got support support support support there bit of resistance so prices come up to here now that's where you want to look for potential short trades and that's how one of the techniques that we use to to understand how to break down wider areas of supply we use not only horizontal but diagonal and dynamic support resistance within these areas of confluences so so yeah so I think that's it for now from a by perspective I think we're looking at that that high to that low prices are contained between this high no I mean this high and this low so this now is a bargain area this was a proven to be a bargain in the past way back in September 2018 and is proving to be a potential bargain right now the Swiss franc does benefit from you know risk of a risk of environment so again with risk off you may expect that the Swiss Frank to were to strengthen potentially but also the dollar does also strengthen the risk of environment as well so let's see what happens but if you want to get long then you're looking at probably a pullback into here that if you want to get short it's going to be the first area to look for short trades you could be buying the Swiss Frank from there so if you're looking at trend some sort of recent trend continuation type trade that would be the area nice round number as well confluence 0.980 right there moving on to the dollar CAD dollar CAD so let me start to look for some demand zones demand so probably around here and again why there because you've got moves being made that are higher so you've got move up move down move up move down and higher highs higher lows right there so that makes a new high pull back into that zone price is making new high yeah so this becomes higher high or higher low this comes with demand zone we also got another demand zone that area right there and we can see the price is now down into this demand zone quite nice from a supply zone perspective again we've got a bit of cluster of supply so we'd probably be doing the same thing as we would up putting enjoyed from around here as we do for the we did for the dollar Swiss where we start to break down these zones now start to look for confluence areas within that area there so I think from what I can see it looks like it's a bit of support resistance within that area you've got support resistance support support support there support there resistance resistance support so if prices come down into this up into this area here that's a decent area to look for potential short trades so yeah quite decent prices are ranging or prices are caught between this high and this low at the moment so at the moment we're buying at what bargain area for the dollar this would be a this would represent its supply zones would represent bargain areas for the Canadian dollar yeah this is seen as you know an absolute buy for the Canadian dollar the Canadian dollar was very you know was a bargain area here so if prices come back up to here that's a nice area to get short if you're buying a Canadian dollar and it's also around fair value of the whole range so that's a that's decent depending on which one you want to be a buyer or seller of moving on to the New Zealand dollar US dollar so this was a nice short I was saying to the group this supply zone really nice for several reasons a nice breakout CPR zone as well anyways we've got supply there and we've got supply right there and if that is a bullish candle close it looks like it is then that's supply there so couple of levels of supply on a daily from a demand zone perspective you've got demand there again why is that demand why these levels demand I'm going to show you in a sec so that's there and then you've got another level there so you're looking at it higher highs higher lows so prices move up prices come down prices move up here pull back prices up pull back that's a bearish candle by the way bearish candle close you can see it there prices move up so again higher lows areas and lows and swing lows are the strongest areas or potentially you know the strongest areas of you know supply and demand and it's obviously some more things that you look into to determine each you know each zone because each zone isn't isn't made the same so there's you know other things we do look at as well so the first demand zone you want to look to get longing is if prices start to come down here and that's the first area if that doesn't work here second and then third and you have to be really believing in New Zealand dollar widening Zealand dollar from a fundamental perspective is a bargain at this price at this at these price zones or you will be a buyer in New Zealand of the US dollar then you're looking at obviously getting short me I would probably be looking at the short side so any kind of pullbacks into this zone here my biases to the short side doesn't mean that you can't get long you know traders can do what they want but I'm more fundamentally driven so I'd be looking at getting short especially due to the fact that we really haven't had a major pullback for a few weeks so I can get an opportunity to get in short want to get short around here but it was over Christmas period New Year's period so wasn't really looking to trade much if at all around this period even though I did enter on the dollar Swiss but I wasn't looking to enter too many dollar trades but yeah so I'm looking at potentially we can get a pullback any kind of short trades on the dollar so that's pretty much it where prices ranging between you've got wide range between that high and that low couple of hundred pips so we're at the top of a nice range where prices potentially make want to you know range between you know at the moment so prices this is a potential bargain area for the for the dollar it was a bargain area here so potential bargain areas here this would be a bargain area for the New Zealand dollar as people traders were buying you know New Zealand dollar down here prices do come down here to be another bargain area potentially for the New Zealand dollar so again proof of value you know this is proven value this is proven value so prices come back up here again if fundamentals is still the same you have a decent probability of a reaction around their traders even taking sorry taking profit from this area here as well as entering new positions short so that's where we want to look for some short trades if we want to be a buyer of the US dollar at this exchange rate moving on to the pound dollar and the pound dollar so again let's go through some supply and demand zones from a supply perspective prices really kind of reacted off of I would say zoom in a little bit probably from here to here you had some more supply from here to here so let's delete that so there we are that's where the supply was it was reacting from again I was looking to potentially get short in this area didn't see an entry but looking to get short in this on this trade at some point and we do have actually prices have made a new supply zone right here so we're looking at demand we've got a nice demand zone there we've also got some demand from there to there probably this whole area really just put it down so the whole area is is demand and then we've got another one right here so you can see how prices have come down into this area of demand and kind of reacted off it now prices are contained between this high and this low so you can start to see now when prices pull back to fair value and wanting to get short as a fair value price or start to get you know the higher this goes it starts to become cheaper for the US dollar yeah the further down we go and you will be a buyer of the British pound this is potentially the cheapest area as you can see buyers got in here so now if you get a pullback this potentially may be a nice buy in the future so again my biases to you know pounds short dollar long so I'm looking for prices can really kind of come up to this area especially this high zone I'm looking to be a seller around here of course things can change but fundamentally the British pound hasn't got that much fundamentally going for it so I'll be you know with Brexit going on poor economy potentially I'll be buying the US dollar if I can get some sort of pullback but doesn't mean that you can't get long on the pounds there are obviously always opportunities to get long on the pound you know so just choose the one that you want to get you know your directional bias and then you know basically trade accordingly dollar so Euro dollar and the Euro dollar I know some traders in the group ended up getting in on this on this trade I was waiting for it for ages and then again the move really happened over Christmas and New Year's and then I didn't really see it wasn't an entry didn't take place unfortunately the rare times where you know these are my my specific entries hadn't occurred over Christmas New Year's but yeah such is life there's always opportunities so we've got a bit of a supply zone here which prices came up into and then we've got demand zone there we've also really got this wider demand zone which is swing there we've got another another demand zone there I guess prices now kind of contained between let's say this area here and that area there so at the moment prices between this high this range here you can see where the ranges right here that's where the ranges you can see where prices are being contained between so again this is a bargain area for dollar as it was a bargain area right here you can see where prices are reacting this is going to be a bargain area for the Euro as you can see prices you know went up from here so prices do come back down here and you want to be a buyer of the Euro that's going to be and the best area to look to buy if not you've got the first area I guess is going to be around here you can see where prices made new highs higher highs and it's potentially maybe a decent area to look for you know any kind of a long trade there if you think that the the Euro is the currency to buy moving on to the Euro yen Euro yen so let's see what's happened here and we have see some supply right there supply I guess we could drag this up you know to around here it's a bit maybe a level bit higher as well no need to put that in just yet so yeah we've got demand right there got some demand here we've got some demand right there so probably see probably from there that's where it started from right so where are we now we're looking to be buyers of the Euro pretty much now's the time we do have a decent some decent confidence within this larger area of of demand you can pretty much see where you've got some support resistance within that zone there so if prices do come down a little bit more decent confidence so you've got support resistance resistance resistance bit support in this area so decent around it's a 120 round number just thereabouts for a long trade if you're looking at short trades I think that's created like a new supply zone right there yeah I think that's pretty much it so you're looking for really kind of like a pullback into you know this zone before looking at getting short this is a decent trade to the downside if risk is off you can see what's happening with the Japanese yen across the board really can see that you know the strength of the yen over the past you know they also as the market reacts to you know the risk off events probably say if we're ranging probably between this high probably this couldn't be that low right there so prices really kind of contained between at the moment so again depends on which way you want to be a buyer so if you want to be a buyer of you know looking to buy the yen you'd have to kind of wait for if prices do pull back to that zone or if prices make a new lower highs lower lows and then you're looking for a pullback at some point into a newly created supply zone the euro is terrible at the moment as far as economy wise but let's see what happens Aussie dollar and the Aussie dollar really similar to the to the New Zealand dollar US dollar where you had similar setup supplier right there nice area of supply prices came up into that zone again I was saying to the guys in the discord group you know that maybe that's that zone there is really nice for a for a sell they're both quite strong currencies to be fair in a risk on environment but just the way that prices you know went up over Christmas into that zone I do like it was due for a reversal you can see pretty much smooth from a demand perspective you can see that's the last bearish candle for prices make new highs last bearish candle for price make new highs last bearish candle for price make a new high so those would be the zones to look for potential buy trades if you're looking to buy the Australian dollar they're going to buy the US dollar maybe pull back into here the better area be a fresher area of supply so anywhere around here prices do pull back look for anything or some sort of short trade again the range from the high to the low is gonna be from here to all the way down up the lows here so here we go that's where prices are ranging between that high and that low and they've been ranging between that since July 2019 so that's where the range is at the moment so that's that represents bargain area potential bargain area for the US dollar and this is this low here represents potential bargain area for the Australian dollar this 50% level is what we would call fair value of the overall expensive and cheap area Aussie yen last pair so let's fib retracement what we've seen supply is there any supply that no surprising quite come up there and then we've got bit of a move there so again this is going to be the last bullish close before prices close and then if we're looking at the swing I think that's probably the highest swing of this whole region here so that's why I've pulled it back all the area supply you can see the prices have kind of just be pissed through it but then you know reacted off that so that's decent when it comes to demand we are into a demand zone last bearish candle before prices make a new high so that is demand and then we've got candle is that candle is that it's bearish candle right there so then we've got last bearish candle before prices make a new higher right there also got this whole zone here so right now if risk is on if risk comes back on on the Monday I highly doubt it but anything can happen and this looks like a really good buy very good buy but probably look at the again the news over the weekend start to read some of the publications and if again it's you know front page news come Monday Sunday night Monday morning chances are you know it's going to be risk off but doesn't mean that you know prices are going to fall it just depends on how the market reacts to risk off sometimes we can risk off environment but we get a bit of a pullback which is still decent to be fair fact what I'm going to do a second I'm going to move this up here creating new supply zone right there reason why it's because because lower high lower lows you got moved down move up move down so that area there can become supply right there but yeah as I was saying sorry that the just because we have risk off doesn't mean that prices are going to you know shoot all the way down like this sometimes risk can take you know position position themselves basically so if everyone now is looking to get short you know if and price prices do want to go lower then what needs to happen is there needs to be some stop hunting going on market manipulation so prices can rise in a risk off environment and if it does then that's brilliant because then it gives you a chance to get in short on the Japanese Yen because you know this main you know not be going away anytime soon yeah especially if there's you know they're talking up you know war look at this in falls red flag war you know war we're talking about this is the kind of language being used so you know price you know may pull back if it does look good look at it and as an opportunity if you want to trade if you want to buy the Japanese Yen be a you know buyer of a safe haven currency and price starts to drift up and then look for potential short trades or if prices you know make lower highs and lower lows like that and you're looking for a pullback into that supply zone which would then look for you know sell trades there if that was to happen so that's going to be it for this week and I hope you gain some some insight and some knowledge into really you know the basics of of supply and demand there's a lot more you know that you know I analyze and you know in in the discord group and with my traders and you know about supply and demand and how to really kind of read supply and demand and identify the best areas potential areas for supply and demand strongest areas weakest areas etc and really the psychology that goes behind it market manipulations and the likes so yeah it is just a I guess a beginner's you know 101 lesson into the weekly analysis hope you enjoyed it sorry for my voice and the coughing hopefully I'm hopefully just resting my voice now and guys take care if you have any questions please comment in the section box below don't forget to like subscribe and share with your fellow traders guys until the next video have a good one