Supply & Demand Institutional candles
Last updated
Last updated
What is this about: This talks about candles which cause big moves, how price rejects off of them and how to use them for entries. Supply and Demand Institutional candles are the candles where the whales enter the market and are visible on the chart through candles. Supply/Demand zones are responsible for huge moves because they represent huge orders. Those orders make those huge moves. Orders get accumulated in consolidations before large orders are injected (shown through supply & demand candles) and price picks a direction to break into.A supply candle is the last bull candle before a major down move. It is considered as a major down move if it is a strong move down and breaks significant support levels.
A demand candle is the last bear candle before a major up move. It is considered as a major up move if it is a strong move up and it breaks significant resistance levels.
When price visits the supply or demand candle zone, price will ideally reject.
For demand candles, price will likely move up when it hits the demand zone (the demand zone is the demand candle’s whole area from the high to the low)
For supply candles, price will likely move down when it hits the supply zone (the supply zone is the supply candle’s whole area from the high to the low)
For a buy, look for a structure break to the upside. Wait for the new high to get validated by price closing inside the range. Then wait for price to reach the demand zone (the demand zone is the high & low of the demand candle which caused the move to the upside). The demand zone should be within the discount zone. If the candle is slightly outside the discount zone, shrink the demand zone to the discount zone.
For a sell, look for a structure break to the downside. Wait for the new low to get validated by price closing inside the range. Then wait for price to reach the supply zone (the supply zone is the high & low of the supply candle which caused the move to the downside). The supply zone should be within the premium zone. If the candle is slightly outside the premium zone, shrink the supply zone to the premium zone.
We are using Institutional candles to enter because
they’re within a discount/premium zone
they caused a huge move to the upside/downside
they’re the reason that price will reject once it reaches that candle (i.e. supply/demand zone) because a lot of orders were injected in that candle which caused a huge move after that. So, it is likely that price will reject off of that zone when it revisits it.
How this can be programmed: Use the rules above for the entry conditions. To find Institutional candles, look for bases on lower timeframes. Institutional candles are lower timeframe bases.
