Market Flow Guide

JEAFX TRADING COURSE
MARKET FLOW
The first & foremost part of technical trading surrounds all aspects of
'market flow'. These include everything discussed so far in the course:
market structure, supply & demand, key levels, imbalances,
accumulation & distribution. This guide puts each of these aspects in
visual form for you to refer to when learning & mastering market flow.
MARKET STRUCTURE
The first and most important aspect of the market flow half of technical
trading is identifying market structure. This is the act of identifying the
trending direction of a market so that we can trade in line with it. To
identify market structure we focus on the high & low points in a market &
how price is now reacting to these previous highs & lows.
The chart above presents a market structure switch from a downtrend to

an uptrend, where price exits a phase of lower highs & lower lows (LH/LL)
and enters into an upward motion of higher highs & higher lows (HH/HL).
Identifying which way the market is moving like this is the first step in
successfully trading with the trend.
KEY LEVELS // SUPPORT & RESISTANCE

Key levels are used to identify areas of reversal or continuation for trade
entries & targets. As we have spoken about we will not be using biased
support & resistance wherever we see fit - instead we will take an
unbiased approach to plotting these levels by using specific preset
rounded off key levels, the numbers ending with: 000/250/500/750/000.
These preplanned key levels often form accurate reactions for reversal or
continuation of market trends, and stop us getting biased with our
support/resistance plotting. We will use these key levels to identify entry
& exit areas for our trades. The chart below shows the key levels in
action & the reactions they produce in a trending market:
You can see how each key level provides support or resistance to price in
line with the overall trend, forming accurate areas of reversal or
continuation to take trades from. Using key levels in line with market
structure gives us the overall trend direction along with potential entry &
exit points for our trades.
SUPPLY & DEMAND

Supply & demand essentially acts as an improved/refined view of
support & resistance and helps us to identify major reversal points in
trending and ranging markets. Supply & demand zones are areas where
large institutional buy or sell orders are accumulated and then
distributed into the market, providing clues as to areas of interest for
bank traders & large-volume institutions.
When we know how to identify these areas we can use them as powerful
buy or sell points in line with market structure & key levels.To identify
supply & demand zones we are looking for areas of consolidation before
sharp upside or downside moves. (which indicate the execution of
institutional orders. When price trades back into that range we have our
buy/sell zone ready to go. Here's an example of some zones:
We will use supply & demand zones as high probability reversal areas for
our trades, in line with the overall market structure & key levels for the
best results.
PRICE IMBALANCES
Price imbalances form when price makes a sharp move one way or the
other. The open space then forms a price imbalance that is more often
than not filled by a future price movement. We use price imbalances to
identify targets for our trades & to filter entries.
The example below shows a large downside move forming a price

imbalance, and then slower upside movement trading back into the
previous area filling the imbalance before more downside.
IMBALANCE FORMS
PRICE THEN FILLS IT
In this instance we could have used this imbalance as either a buy trade
target or as a filter not to sell the market until the imbalance was filled.
Imbalances are best used to identify potential areas of interest for targets
& entries and should always be used alongside other market flow aspects.
Best used in conjunction with key levels & supply/demand zones.
ACCUMULATION & DISTRIBUTION

Accumulation & distribution schematics are price formations that
indicate a build up in buying or selling pressure. These schematics come
before a phase of upside or downside movement known as 'markup' or
'markdown' and form because of institutional market participants
accumulating buy or sell orders at a specific price point.
We look to trade the accumulation/distribution schematics in line with

institutional participants as best we can in order to follow the flow of
money through the market in the right direction. Accumulation &
distribution schematics can be difficult to identify initially but provide
excellent signal of reversal in a market. Here's a look at each of the
schematics:
ACCUMULATION
An accumulation schematic is made up of a selling climax (SC) where
sellers close positions & buyers begin adding orders, the market then
consolidates and forms a 'spring' where the low of the range is briefly
taken out, then a 'sign of strength' (SoS) kicks in taking out the high of the
range before entering a phase of markup.
SoS
Buying Point
SC
Spring
DISTRIBUTION
A distribution schematic is made up of a buying climax (BC) where buyers
close positions & sellers begin adding orders, the market then
consolidates and forms a 'spring' where the high of the range is briefly
taken out, then a 'sign of weakness' (SoW) kicks in taking out the low of
the range before entering a phase of markdown.
Spring
BC
Selling Point
RECAPPING THE PRINCIPLES

Each phase of the accumulation/distribution schematic has a story
behind it. Selling/buying climax shows sellers/buyers closing out
positions & taking profits on their movements which leads to a
slow down in momentum. The spring shows one final attempt by
buyers or sellers to keep the market flowing in a given direction
before the other party takes control, and then the sign of
strength/weakness forms the take off of the
accumulation/distribution schematic into a phase of
markup/markdown, showing buyers or sellers gaining absolute
strength against the other party.
MARKET FLOW RECAP

All the market flow aspects that we've covered here form the backbone
of our technical trading strategy. It's important to take the time to
master each of the methods that we've spoken about and learn to use
them in conjunction with one another in order to trade successfully.
Give yourself time to backtest each of these methods using past price
data & train your eyes & mind to identify market structure, key levels,
imbalances, supply & demand zones, accumulation & distribution.
Supply zone (target)
structure taken out
Imbalance
Demand zone (entry)
THANK YOU

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What are the main components of market flow discussed in the document?

How are key levels used in technical analysis according to the document?

JEAFX TRADING COURSE

The chart above presents a market structure switch from a downtrend to

KEY LEVELS // SUPPORT & RESISTANCE

SUPPLY & DEMAND

The example below shows a large downside move forming a price

PRICE THEN FILLS IT

ACCUMULATION & DISTRIBUTION

We look to trade the accumulation/distribution schematics in line with

RECAPPING THE PRINCIPLES

MARKET FLOW RECAP

Supply zone (target)

structure taken out

Demand zone (entry)

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