Hi, First of all I would like to remind about my last update, of Eur/usd where I mentioned that Euro is sitting on weekly demand and pair rallied to 1.1460 and that is why I always it is really worth to taking weekly and high time frames into consideration.
Now, the question arise here whether supply and demand are the same as term use for support and resistance. Answer is simple and straight "No", because support and resistance have no concern for smart players as they use them for take profits and when we see again that those areas hold it could just act at supply or demand and that is why price turned at high reversal points.
I am hereby putting everything together in one chart and with a live example of eur/jpy where you can see that why every support is not support all the time and why we find strong holders sitting at high or low with the break of those small support and resistance areas.
Supply and Demand Vs Support and Resistance
Its about decision points after we have seen some strong areas of demand and supply ignored and Reaction when price again approach those areas. In this case We have some history but that history won't be considered as valid untill we see another approach to test the borken areas. Price made a lower high after strong decision points marked as fresh demand with the blue box but price reacts well before it and compressed to ignored demand (second one). We saw a strong decision point through the ignored demand and price retest with new lower low was strong confirmation of pending sell orders and price reacts immediately and fall to test the demand formed and that is where I would looking to close.
Approach to support and resistance is difference between Pro and Novice traders and when you some history it has to be validated with context and when everything synchronize well with history then we get to conclusion that smart money is present in the market and playing the tricks and we just need to be conscious to get and entry stops and target.
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