 Hi, my name is Leon Roeb currency trader and trading coach at trading 180.com and in this video I'm going to be explaining why support and resistance zones are Supply and demand zones now many of you watching this video would have been under the impression due to YouTube popular videos and Instagram and Facebook that actually support and resistance is different from supply and demand and the only difference is really the way that you actually Trade the zones, but They support and resistance zones are actually past supply and demand zones, and I'm really going to get into it in this next Maybe five ten minutes. We've been example as well. I use probably gold recent gold analysis To really kind of highlight the point so First of all what we have to do is really understand, you know supply and demand versus Support and resistance and again, like I said, it's just it's just a difference in really how they're approached So what we have to do is first of all when we're looking at Supply and demand is we're understanding Value right so typically this is how traders will draw or this is how I draw anyway And understand supply and demand. Yeah, so supply and demand is higher highs and higher lows where this area here is going to be an area of Demand because if we take this this first leg from this low, yeah to this high This is where demand started. Yeah, and this is where supply comes in because prices cannot go past You know a certain price point So let's say for example, that's price and that's time when we're on a price chart. Yeah, whatever Price this is. Yeah, let's say for example. It was five. Yeah at this point in time This was seen as an expensive area. Therefore prices couldn't make its way higher. So then Traders probably started selling taking profit. There was more supply here than demand and buy orders. Yeah So this is where all the buy orders were more demand more buy orders prices go higher until The imbalance in supply and demand where there's more supply here, right traders not seeing this as an area where this is an Absolute bargain area. They're seeing that as in as an expensive area. All right. This is expensive Yeah, and then profit taking etc goes on. Yeah now when prices start to fall Obviously, there's more supply orders than demand orders But when you get another leg higher, so many traders recognize this as higher highs and higher lows So buying starts here again. Yeah, so more demand starts here buying and as prices make their way higher Yeah, when it goes past a previous expensive area Yeah, previous expensive area What was considered expensive here because we know that for a fact because prices couldn't push higher Buyers weren't willing to buy at this, you know, this this this price point whatever this price point is But if later on prices do do something like that. Yeah, go higher Then this is then seen as this as a potential strong area of demand because this is where the Origin of the move was in the same way that this was the origin of the move that made the move higher. Yeah, so When we're looking at trading supply and demand, it's always higher highs higher lows Yeah, this drop base rally rally base drop thing is is, you know, it's something different When we're looking at price charts, it's always about higher highs and higher lows This is what we need to determine. This is what makes sense. Yeah so as New highs are made Yeah, the swing the higher low this whole area here becomes the strongest area of the month right now with support and resistance How traders will trade support and resistance is pretty much a similar thing where you get higher highs and higher lows and What traders will look at is a previous area Yeah, of what is known as resistance Yeah, and then looking for the For a pattern here, right? So this was a previous expensive area here and So traders are now looking at trading the The the the unders were they were trading the underside of that and I look into trade the The other side of that because this is what resistance As we're taught should turn to what support Yeah This is going to be support if obviously prices are actually supported But in anticipation of that that's where traders are looking to trade but if you actually now look at Similarities between support and resistance and supply and demand. It's just a case of We as Supply and demand traders are trading down here. Yeah, that area right there So if we're looking at this being Bargain area or the cheapest area and we know that to be true because Buyers were buying and buying and buying so much so that even at a previous expensive area prices went to the upside Yeah, so this has to be the most recent bargain when traders When traders are looking at buying Here they're actually not buying in the best place are they? Support doesn't always represent the best place to buy now It's the best place if it's part of your you know support and resistance strategy Yeah, but from a demand zone perspective and what we know to be true about, you know, what price is doing is showing us this Cannot be the best area to buy if we're taking this higher low Yeah, and higher high and the higher high principle This is gonna be this level of demand is going to be the best area Yeah, and when we think about what supply? Sorry support and resistance levels are they are actually just failed Supply and demand zone so again going back to this area here if all we saw was this high and a pullback This is a supply zone or a supply level And then when prices come back to it Yeah, so it didn't work here, but when prices come back to it This was a failed supply zone that turns into a Support area or what traders would term support So it was failed supply failed supply and that is all support and resistance levels are Yeah, is that they are past Supply and demand zones that have been projected into the future Right that have failed to work and then traders are just trading the other side of that area Yeah, but also remember the most important bit is that while traders Who trade tend to trade support and resistance areas? Yeah Are getting in here the most important thing is that if we're taking this as an expensive area higher highs because prices Couldn't push higher than whatever this price was here But the origin of the move up Yeah, the higher low is a proven bargain area Then support and resistance isn't always the best area when we're choosing Bargains because everyone knows the mantra the cliche by low sell high is this low sometimes a lot of times when If you guys know about Fibonacci, you're pulling a Fibonacci from a low to a high you're choosing a leg Aren't you choosing a swing right and all Fibonacci is is just looking at the discount. So sometimes you get a 38.2 Yeah, percent discount Some traders will look at the 50% Yeah, this might be 50% discount from the high to low That's why traders trade pullbacks and that's not to say that support and resistance doesn't work Of course, it does it can work and it does work on a price chart But if you're looking at buying at the best areas you want to look for The bargain basement even the sixty one point eight percent Yeah Fibonacci is a nice discount is a very nice discount But it's not the best If this was a bargain here Yeah, and prices make their way down to a demand zone Then that's gonna be the best area to look for a buy trade if we know fundamentally because Prices are driven by really free things fundamentals risk sentiment. Yeah, so risk sentiment risk on and risk off and liquidity Right Outside of that. I don't think there's really anything that markets driven by Fundamental analysis which determines value risk sentiment safe haven plays as and risk tolerance and The amount of liquidity that there is for prices to move higher or lower. Yeah, so What can we do? What can we do? To potentially trade both at the same time so combining Support and resistance with supply and demand zones. That's really what we're looking to do So let me draw that out for you. All right, so what you want to see is You see something like this Yeah, remember higher highs and higher lows are areas where You know of the best demand so if you're in the demand zone that would be Where it is, you know So higher highs higher lows and then you went for a new high now Again, once a new high is made at your level of Demand or the best area to look for buy trades And then what you want to do is Prices come back down to this area is combine that Previous support and resistance So remember this was a failed. This is a risk. This was a supply zone Yeah, which traders would call, you know resistance It failed here Traders would normally get in here Not supply and demand trades. We're looking for proof. Right proof of Value first we need the market to prove that there is strong demand here That's what we want. I mean we can only do that if prices start to make new highs or what would be considered an expensive area So we need the market to prove that that is a strong area of demand And then when price comes back to this area here then not only do we look to potentially buy if our fundamental and Resentment analysis says so but then we can also look to combine what other areas of Support and resistance or failed Supply zones in this case. Yeah, because we know other traders are looking at trading this Area right because any trader that's looking at resistance potential support is going to be looking here as well So we have not only understanding the bigger picture and understanding that we want to be buyers here Yeah, so by orders of demand. We're also going to have other traders you trade support and resistance looking at doing what? buying as well Yeah, so there could be new traders entering into here who are looking to the left and understanding that this is a level of What they termed to be support and resistance when pretty much? Support and resistance is supply and Demand yeah, so that's our order equation confluence because you've got to think to yourself from a technical analysis perspective Why would there be more? supply here Then demand because if there was more supply there then prices would put you know would drop yeah None of us truly ever know because the market is a probabilities game. All right, but From a technical analysis perspective, and if you know, we're looking to buy anywhere. This makes sense understanding how market participants Enter the market technically This area here. Yeah, which would be again Resistance is not the best area to look for a trade doesn't matter if prices go higher good for them Yeah, good for those traders What we need to do is have proven proof of value. Yeah, if I'm going to the shop I don't want to if I want to get a discount. I'm not looking to get a 20 or 30% discount half price is nice but I want The absolute bargain and you should too. Yeah, so let's Look at this on a price chart. Let's go to gold and look at this on the gold price chart So on this price chart of gold We've got what traders were typically termed as Support and resistance, right? So you've got a level of resistance there Level has been rejected. First of all, you know, and then it's got a level here Then you've got another bit of rejection there and then failed Resistance becomes what? potential support Yeah But now I want you to look at this in I guess the the terms of Supply and demand so let's get rid of This area here. So what we've got is We've got let me this Lower highs and lower lows being made low lower high low alone so this area becomes an area of Supply Yeah There becomes an area of supply and let's just Get rid of that for now Yeah, that whole area now is an area of Supply, let me just turn this to a supply zone So you can see yeah, lower highs lower lows When prices come back up here that is Supply supply zone ended up holding brilliant Now as we go forward Drag this across And in fact we can move the supply zone up here like that You go across into this zone here We can see that that level of supply because this would have been an expensive area, correct? This is what we know to be an expensive area Why because prices couldn't go higher than this Buyers didn't want to push prices higher. This wasn't seen as an absolute bargain So we've got more selling sell orders or supply orders which drove the market down something's obviously changed So buyers ended up buying in here, right high high high low Higher high higher low higher high right there Yeah, each higher higher pushes prices higher. We have to say that's a potential bargain That is a potential bargain That is a potential bargain Yeah, but let's look at this in the context of Demand so as we go through and let's just get rid of all this So traders are now looking at this area as we pointed out before as an area What support and resistance? Correct resistance resistance there should be where traders would be getting involved Somewhere around here and it does All right now we don't necessarily have the strongest area of demand There is definitely demand here because there was buyers here and prices were moving higher Yeah, so there is some demand here Is it a strong area of demand? No, not yet. We want to see proof of value prices really need to go above This area here This area here before really saying that anything around here is a decent area of the month Yeah, so not yet not yet Not yet then we start to get Prices move to the upside so now We can start to see that this whole area here now starts to become a nice area of Potential strong demand because buyers come into the market and they're pushing prices above what is considered a past Expensive area. Yep So now prices come back down Or if they do come back down you can start to see Where buyers are getting into the market there. Yeah, they're starting to get in now Here so as prices come down into this area higher highs higher lows, this was the higher high here in this area So that was the higher high And these areas now start to look like what higher lows So then when prices come back down into these areas, this is where you want to look potentially to Get long because it was a proven bargain here back in April Which led to a new high? So now it's about trying to get involved in Where we are currently today Yeah with the combination of what? resistance resistance turn to what Support support. So this was a past supply zone past supply zone that had been Take this area here. Sorry. Yeah, that had been projected into the future and is acting as what now support So whenever you See anyone else talk about supplying the difference between supply and demand and support and resistance This is the definitive video. You will probably won't find anything else like this on YouTube My ideas are my own original and if anyone has You know the same idea then great for them But this is original thoughts and this is what makes sense to me logically It was was made sense to me for a number of years. Yeah, so there is no difference the search is over You don't need to You know worry about any more as far as the difference you can trade both a lot of traders tend to say one or the other is Is is is better one isn't necessarily better than the other? Because they're both the same. It's just the approach and how you look at the market. Yeah, and why there's likely to be more Demand here. Yeah, so why is it likely to be more demand in this area? Because trade first of all, we know that it's a bargain area because you made a new high. Yeah a new high so potential bargain We as supply and demand traders demand traders are going to get in here But then you've also got the added confluence of support and resistance traders who are looking at that level Looking to the left and looking to get involved in here as well. So more Buying yeah, I must add a caveat to this though is that the more and level is touched the weaker it becomes Yeah, the weaker it becomes so what you really want to get involved in is the fresher areas of demand Yeah, fresh areas of demand, you know, first areas are the best areas to look for By trades the more times, you know, three four touches of a level the less successful or the chances of success It's actually becomes and you can back test that if you want to anyways guys that brings me to the end of this video Hope you enjoyed it. Hope you found this useful as well. And until the next video. Take care So if what I'm saying resonates with you, why not check out trading 180 comm there is a Selection process to trade my supply and demand zone for X strategy. I'm only looking to work with Individuals with the right mindset, you know, who are hard-working as well So check that out and access really for less than one pound a day This some of the strategies in here are not for beginners So if you don't know what supply and demand is, please check out all of my Supply and demand videos. I have hundreds of videos on YouTube. So you can check that out first Guys take care and until the next video. Have a good one