3 SMS Trade Patterns

Supply and Demand flip

In this pattern, the price creates a new high. It tests the last demand Zone and pushes away from it but fails to create a new higher high instead of creating a higher high, it breaks through the last demand Zone with an impulsive move leaving a supply Zone behind price retested the supply level where we put our limit order and opened our position.

Let's see a live chart example here price broke through the structure level with inefficiency, leaving behind an extreme Supply level.

After mitigating the supply, Zone price failed to make a new higher high; it broke through the supply level within the efficiency, making this candle a perfect order block and an opportunity to go short. This is how we execute our trade. We place our order as spread size below the order block Zone with our stop loss a couple of Pips above; we will Target the next demand Zone in the higher time frame. However, remember this pattern is most effective when the price aggressively pushes away from demand and Supply zones and rapidly breaks through the last demand Zone leaving inefficiency behind.

Change of Character pattern

This pattern forms after mitigating a higher time frame Supply or demand, meaning that we always trade this pattern if we have the market in our Direction in higher time frames here; our higher time frame direction is bearish after mitigating the supply Zone, our short-term Trend changes the character with inefficiency leaving a perfect Supply Zone so when the price gets back to this level we will execute our short entries.

So here we have the euro dollar 15-minute chart. We have a bullish bias and a perfect four hours unmitigated order block. As the price approaches this Zone, we have no idea if it will push the price to the upside or not because although the higher time frame is bullish, we have a bearish short-term downtrend.

After hitting the demand, Zone Market makes a change of character with an inefficient move leading behind a perfect 15-minute order block, so this is a signal that the short-term downtrend is over, and the market can potentially continue to move to the upside.

Continuation Pattern

We only trade this pattern when we have a clear trending Market. Every time Market makes a valid order block with all the rules we discussed earlier; it is an opportunity to place a trade only if we have both higher and lower time frame Direction on our side but

Remember, the Market will give you a lot of entries while trading this pattern, so you have to manage your risk carefully.