 Hi, my name is Leon Roeb currency trader and trading coach at trading 180 comm and in this video I'm going to talk about combining fundamental and technical demand and supply and Many retail traders really don't apply fundamental analysis To their trading for various reasons. There's a bit of a stigma about fundamental analysis Which I think is is put out there plus people tend to I guess move towards the path of least resistance, right? Which basically just means that technicals Is a lot easier, right? It's the path of least resistance. It's the easier way Whereas, you know at the beginning of learning fundamental analysis, it can be Quite difficult. There's a learning curve there But once you actually understand what's going on and how the pieces tend to move then it does become a lot easier Just like riding a bike right already any skill anyways Combine a fundamental a technical demand and supply Really, I think is imperative for your, you know trading success in this because if you you know if the two aren't aligned there's no Technical level that's really going to work right technical demand or technical supplies It's not going to work without the combination of fundamental demand in alignment, right or supply so We're a natural gas and Fundamentally In November November the 16th This was a Bloomberg article markets were saying that well warm start to winter leaves more gas for next year Goldman Sets Europe will end winter with better than expected gas storage weak Chinese LNG demand also means more supply for Europe's and more supply now Commodities are driven by supply and demand the supply and demand dynamic, right? The more demand you have price to go higher the more supply you have a price to go lower and so With warmer weather Comes less demand right and probably more supply, which is basically what you know this subheading was saying and And so, you know the the issue was that the exceptionally mild weather Experienced in Northwest Europe since October has led to a sharp drop in gas prices sooner than Goldman expected the analysts set and so with you know warm weather affecting the supply and demand dynamic right prices right the demand for prices was wasn't really there it was a lot more supply and And so, you know, that was really a kind of early, you know signal if you were trading natural gas fundamentally to you know to kind of watch right and so We also had You know in in January my January the third that actually was confirmed because obviously the weather Nobody can really predict the weather, but it did turn out that we did have overall warmer weather In the end right and so natural gas prices are plunging on a warmer start to the winter Right, so mild weather seen from Europe to China over the next few weeks gas rationing unlikely as top importers have built stock piles So again, it already built their stock piles said it was probably a lot of supply in the market Yeah, more supply than demand because they built their stockpiles right and so when you actually then start to go forward and you know realize that There was probably more supply fundamental supply than demand as I said before There's no technical analysis level. That's really gonna stand in the way of fundamental Supply and demand right and so you've got varying levels of demand Right varying levels of what traders would you know draw in demand, right? So you've got demand in and around that zone here You've got demand going way back to June 21 Demand zone there demand zone there demand zone there, right now doesn't necessarily matter exactly how you draw it Right, but there is demand in and around these areas here However, you draw, you know technical demand or technical supply, but in this case it would be technical demand and so with fundamental Demand not aligning with technical demand Trying to pick lows right trying to pick the turning points because that's pretty much what traders attempt to do Yeah, is practically In not I wouldn't say impossible right you might do it by luck But it's really not gonna work out in your favor in terms of the probabilities, right and you can see You know what happens now there does come a point and it always will come a point where Liquidity needs to be sought right in terms of there's a build-up of liquidity above the market And if there's not enough sellers to push price, you know down in terms of sell orders and liquidity Then the market must look for sell orders above the market meaning You know that you know you get I was why you get like, you know short squeezes right they do tend to happen and There was a period where you did get some moves to the upside, right? And it did bounce off of actually the lower end of that demand zone, which was all the way back In October 2020, but who would have known that right in real time you would have been you know Taking loss after loss after loss after loss had you had been trying to time these Demand zones not aligning that the fundamentals are not aligned with that, you know with the technicals, right? And so you do get finally a bit of a move higher Why tend to refer as you know proof of value. Yeah, but then and I just want to just delete, you know, these These are demand zones off the chart Right So you do get an area where there is now proof of value right proof of value meaning that price has proved that there is You know potential demand here now when prices Do come back to this area here the question then becomes is why is natural gas even though it was a bargain right here There was definitely buyers getting involved in that area, right or less sellers getting involved in that area Why is this if prices do pull back to this area wise this price likely to be a Bargain right so has the fundamentals changed to the point where value that this becomes value So price and value with two different things Price isn't always reflective of value and value doesn't always reflect price or current price That's why things are undervalued or expensive right or cheaper a bargain price or expensive Now a question for traders would be is that a bargain price? Yeah now again, if you don't understand fundamental analysis and why You know natural gas may not have been a bargain at that price then You're likely being caught Being caught out again at that level right so timing this was very difficult Right, you would have to go through maybe about maybe seven eight demands Before you actually ended up maybe making some money on that if you managed to pick that low And then when prices come back again, the question becomes is that you know bargain and obviously the market doesn't think so Right, there's no demand there. There's no fundamental demand for natural gas And so if you do want to improve your you know your win rates your You know just even the the assets that you actually trade and understanding the assets that you trade It is imperative that you understand Fundamental demand right on a larger scale fundamental demand fundamental supply Why there's likely to be more demand and supply or supply the demand understanding the dynamics of the asset that you're trading and not just look towards You know the technicals in order to determine your directional bias All right, take care guys and speak to you soon