Supply/Demand Concepts On AUDNZD and USDJPY Chart

AUDNZD M15

USDJPY M5

Was looking at some charts and it was amazing to see how some Supply/Demand concepts played out. Notice that after breakouts, price doesn't always retrace to the classical S/R level and rebound there. It'll sometimes cut through the S/R level and reach for the demand zone which is the origin of the breakout. Why does it do so? We are taught that the definition for a breakout is price breaking a S/R level. That is true, but we do not realize that the origin of the breakout is not always at the S/R level, sometimes it starts below it as in the above two examples. We can identify these origins as levels where price burst very rapidly and sharply. From an order book perspective, there are still many unfilled buy orders there. As such, professionals will sometimes spike price all the way back down to target these levels and get the buy orders filled. Think about it, many textbook traders who bought the breakout will have their stops below the classical S/R level, I used to do so too. When prices drop below this level, these traders will have to cut loss (sell), propelling price further down towards the demand zone where the professionals happily get their buy orders filled.

Also, notice the regions of compression in the AUDNZD chart? See how price often cuts through compression regions very swiftly. Again this is because there is nothing left in that region to stop price as the professionals have already prepared their path and removed any supply/demand prior to the move.