The Bouncing Zone Strategy (S&D levels)

thomaas

Trader
Oct 31, 2013
6
0
17
Hi eveyone!

I've been sucessfuly trading for the last 6 months with an interesting strategy. I call it "the bouncing zone strategy", it's inspired a lot by the "supply an demand levels". You can read below the basic idea of this strategy.

Sometimes we see price moving very rapidly in one direction. What does it mean? Let's use an example to make things simple:
- Some people are selling a huge amount of $currency, and these "some people" are usually big banks
- That makes the price drop quickly from 1.3 to 1.2
- It means that a lot of people who wanted to sell $currency at around 1.3 couldn't do so, since price moved so fast
- So next time the price goes back around 1.3, a lot of sell orders are going to be triggered, and price is going to move down again
- Of course it works the opposite if price increased from 1.2 to 1.3

Once you realise that, you just have to use this information at your advantage. Here's a EUR/USD chart that shows this.

bounce_zone.png

Legend:
1) Price dropped quickly from here, we call this a zone
2) Then when the price reaches back the same zone, the price bounce

Now you should understand why we call this strategy "bouncing zones". So you just have to identify these zones, place orders when the price goes back into these zones, and wait for the price to bounce. Obviously not all zones are going to work as planned. But from my experience, enough are going to work in our favor to make this system work, and make money.

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If you want to learn more about it, I made a small blog where I talk about it in greater detail. Everything is free, no ads, and nothing to sell. That's why I got the moderators approval to talk about it here.

To learn more about this strategy: www.21pips.com

Let me know what you think, and feel free to ask questions! :)
Thomaas