Exercise 1: Marking Up Supply and Demand

Choose any timeframe and instrument – in the example below I have chosen the 15 minute USD/JPY.

Mark as many supply and demand zones as you can find (tested and untested). Use a different colour to mark the zones that failed or were engulfed to the
zones that worked. Drill down to a lower timeframe and note where price bounced and whether entry could have been more accurate.

Calculate your potential win/loss rate and average risk/reward ratio across all trades.
Exercise 2: Supply and Demand Patterns

Select a different instrument and timeframe to the previous exercise.

On your trading chart, find and mark examples of each of the following:

1. Bullish Reversal (drop, base, rally).

2. Bearish Reversal (rally, base, drop).
3. Bullish Continuation (rally, base, rally).
4. Bearish Continuation (drop, base, drop).

The following page shows an example using the 5 minute GBP/USD:

Exercise 3: Zeroing in on Supply and Demand

On the following page, there is a 1 minute chart of gold with two demand zones:

 Smaller Demand A.
 Larger Demand B that encompasses Demand A.

Decide which of the two zones would be your optimum entry level. Zoom in and view the chart at maximum size to see what is going on.

The answer is at the end of this document!

Exercise 4: Compression

Find examples of compression and mark them on a chart. Hint: you will often find compression inside a bull or bear flag.

5 min EURUSD example:

Exercise 5: Engulfs

Find examples of engulfs and mark them on a chart. Also mark the opposite zone that caused the engulf and whether that zone worked or failed.

Below are 2 examples on the 15 min Kiwi (NZD/USD):

Exercise 6: Break and Retests

Find examples of Break and Retests. Mark them on a chart and then find the demand or supply zone at or preceding the break.

The more touches of support/resistance before the break, the better!

Here’s some examples on Gold (XAUUSD).

Exercise 7: Market Maker Spikes

Find examples of Market Maker Spikes on a chosen timeframe and instrument.

An example is shown below.

Exercise 8: Bull and Bear traps

Find examples of Bull and Bear traps. Mark the support or resistance level that is “faked out” and the Supply or Demand zone that it spikes into.

Example:
Answer to exercise 3

The preferred zone is (B). Price retraced and created a wick (indicated by the left-hand circled area). At the point where the wick ended, the fast move
started, and that is the boundary of our zone. Indeed… on the retest (second circle), this is where price bounced.

However from a risk/reward point of view, there is no problem with marking your zone as per (A) where the candle bodies were breached. As we know,
trading is not a science and it’s always possible that the market can test deeper inside a zone. Having a pending order at the boundary of zone A would have
given you better risk/reward but with the possibility of missing the trade (as in this case).