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TOPIC: About Compression

Compression is one of the most important signs that the price prepares itself for.
When the price is increasing toward the supply zone, it drops while moving up and
fills up the buy orders that are placed in the upmove. This allows the price to quickly
drop into the CP area immediately after reaching the supply zone. The figure is also
true for CP TO DEMAND.

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Touch trading supply or demand zones can have a very daunting perspective, since
the price usually does not react as we expect it to.
However, a lot of times we show that major traders want to change the direction of
price in the next area. When price moves up, they start to sell to the last available
pocket of demand and consume the orders; so later, when they place their big orders
in the supply zone, all the buy orders in the way are already consumed and the price
is free to go all the way to the origin of the compression area and further down.
Compression to demand works exactly the same way.
When price drops down here, traders place their sale orders here.
According to the green lines –which represent compression, the price
moves easily upward, absorbs these orders, and drops further.

Since there is no supply left, we see that the price

is free to move up through the compression;
because there are no orders left in the opposite
Same here direction. Remember that your target is the origin
of compression.

And here

See why price retraced

in the chart below

Great history
Fresh
demand

Target of old CP

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In the following example, the price is compressed toward a certain point in the
upmove. Up there, there is no supply left before the origin of the drop; so the price
shoots upward before the turn and enters the compression area. This is called
compression and liquidity (CPLQ).

Liquidity, CP broke.

Price easily
cuts
compression.
Supply is
overlooked.

Compression here
turns this entire area
into supply.

Beware of price shooting

toward supply when there
is a flag limit exactly
beneath it.

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Last fresh demand before

CP is tested with a great
Price breaks the area, feedback.
retraces and retests it.
Price breaks origin, retraces,
and enters CP.
Upmove origin. Is this a
All this area is CP, significant demand? Looks
so the chances of like it; but it’s touched with
a good reaction the shadow in the upmove.
are low.

Find 20 executions of CP –especially in higher timeframes– and explain what you

see. When you look for CP, assign at least 20 simultaneous CPLQs to find it.

A casual trader says:

Before I start the compression exercises, I want to make an example of what I think
compression means; because if I am sure of what I think, I can do my homework
better.
In the following chart, the black horizontal lines are demand and the green lines
show how the price turns and absorbs demand from those levels; so you don’t expect
any demand to be left in that level. The grey areas represent fresh demand; which
means that you expect price to react to them and also attract the profit limits of many
trades to itself.
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Actually, I had already drawn the supply zone before the price returns to it; but I
didn’t see any kind of compression on its way back. That’s why I didn’t trade this
supply zone.

IF:
Yes, when price reaches below the highest fresh demand zone, it is free to enter the
CP zone and move on to the next fresh demand zone.

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Another example:

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Regarding the examples above, WHITEOUT writes:

Hello OUTAPIPS,
The thing is, I am also here to learn just like you; so I am not a master (WHITEOUT
is a master, but he denies it). However, I have spent a lot of times on CPs; so the
more you imagine the less you have. And if you don’t mind, I would like to share
some of my observations with you. Maybe you can find some valuable points in it
that can help you. If I have said something wrong, someone who is more expert than
you and I will guide us and that will be beneficial to both of us. Maybe this way, IF
and the others can take some time for their other works.
Let’s go to the first three which are all connected to each other. When do we talk
about CP (in this case compression to supply)? When have we seen price pick up its
last decision point along with the orders that are left there? In this one case, we are
talking about compression to a supply zone; so we observe the price. If the price
moves frantically in peaks and steadily in valleys, we search for the decision areas.
In this case, the areas we are looking for are the demand zones. Has the price
reviewed them? Or are they still fresh zones? Can the price drop easily? Why are
these observations so disturbing?
Well, because they help me understand that when I see compression creating neat
peaks and valleys, I just have to check the demand (or supply) zone and see whether
these zones are fresh or not. That’s all it is.
Figure 1 suits my needs. Just remember that this is merely a trade in a 5-minute
timeframe; so we leave our trade in the first demand zone.

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The second chart:

I know all those spikes can seem a lot more interesting in a 15-minute timeframe
rather than a 5-minute one. But let’s look at the 5-minute timeframe carefully. You
see that there are a lot of fresh demand zones left! And you are surprised!

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The third chart:

Well to tell you the truth, I don’t like the lines you have plotted; because it looks like
the entire foot has been compressed, while it hasn’t. You just need to find an entry
point, but that’s another story.

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May I ask why you have considered the following figure as a CP?

After Mr. WHITEOUT’s explanations, the following question is asked of him

regarding figure 1:

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How did you know that the reaction to that region was not in the form of a
compression and that the demand zone is still not used and consumed completely?

WHITEOUT responds:
Because the source of demand had not been tested yet. The big engulf candle could
be the last spark in the demand zone. Yes, but then the price was getting close to it;
so I assumed that there is still demand left in the area. Look how the price drop has
stopped in 10 JULs. This analysis is done after that has happened. But if you do this
1000 times, you will become proficient in live analyses as well.
But how can this help in a real trade?
Well, look how the price has moved down after the CP with a big momentum
downward. It reacts, retests, and engulfs the supply zone. I leave here, my profit will
go into the bank. That’s why I carefully observe this zone.

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Continuing:
Another point is that:
In a compression to supply, it can be said that the consumption of supply is
unimportant and when price gets close to a proper supply zone, all the demands
beneath it are cleared for a proper and clear drop.
Another topic:
Instead of looking at lower timeframes, find compression followed by liquidity in
high timeframes. This is what IF is emphasizing on.

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Another example:

Regarding the concept of compression, when the price nears a supply zone in a
compressed manner, the downward shadows in its way are actually consuming the
demand. Therefore, they create a smooth path with no barrier –but with severe
fluctuations– on the way back.

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The following context is posted by Mr. RED in the FOREXFACTORY website:

Price increases in a compressed manner to find fresh supply. The downward

shadows do different tasks at the same time. The price is trying to find small
demands and test them in order to move to the best supply zone. Therefore, these
shadows –which are being formed downward– are also consuming those small
demands; so the downmove is suddenly cleared of buy orders and gets ready for the
price drop after finding a fresh and suitable supply zone. The demand is clearly
consumed for the drop on its way up to find a proper supply zone and thus opens the
way for sellers up there so that there is no demand in their way.
The following figure is provided by Mr. RED:

Some of you are confused in distinguishing between a flag and a CP. Why does a
BULLFLAG come down? Well, I will tell you why. Bullflags come down to
consume sale orders or “consume sellers”, so to speak. When sale orders are
consumed, the FL is completed and the price can grow. There’s no secret in that.
After that, the price creates a flag for its own growth; and on the other hand, when
price nears a suitable supply zone, that is a compression. So the problem is solved
too.

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A question is asked here of Mr. Harry:

According to Mr. RED’s instructions, a compression to a proper supply zone means
clearing and consuming demand and buy orders by creating shadows toward the
south; so that there will be no barrier for the drop when price is retracing. But the
question is:
Sometimes you can see the shadows on both sides; what to do then? For instance,
see this example from Mr. IF. What about those shadows? Did they consume supply
and clear sale orders?

Mr. Harry provides some examples for us regarding price compression which we
will discuss in the following:

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The first two are not tested yet and it will be very interesting to see how the price
will behave once it gets there.
As a quote from IF:
Compression means taking out and clearing the price and the remaining orders at the
last decision point.
Now let’s address Harry’s examples:

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In the following, we will see an example from Mr. IF and his explanations on it:

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As you know, low liquidity in compression can cause more bounces and fluctuations.

Following that:

Examples from Mr. PEDINI:

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An example from IF:

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We read Mr. OKAMI’s explanations on compression:

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In the first chart, I see many interesting points regarding compression; but it seems
that the only case that can be called a CP is the fourth one. The first three are flags.
The fifth case is a triangle or a pennant. CP is a reversal pattern; while flags are
continuing patterns in PA. However, it seems that they are sharing their nature –
which is to consume orders, while the price simultaneously moves toward its desired
level, clearing the way for its next moves.
For example in this chart, why does the price reach the area of interest as a POLE
and doesn’t cover the path upward in a compressed manner?
In the CP example (the main case in the center of the chart), we can see how the
price has dropped down, broken most of the recent Lows, and created a pin bar that
traps sellers. This charges the price to reach the target supply zone. The second chart
I have uploaded demonstrates my opinion in detail:

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In response to Okami, a trader says in another post: In my opinion, compression is a

kind of flag itself and has nothing to do with being reversal or continuous. You can
have compression during the formation of a flag.
In response to Okami, Mr. Whiteout writes:
I know that the question of CPs and flags is a big problem when you get involved in
it. Speaking generally, there are things I would like to remember about flags and CPs
when I look at charts.
Yes, a flag is a continuing pattern, the meaning of which should be understood in
depth as always. This is the most important part, while CP to a supply or demand
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zone has a reversal meaning. Yes, a flag can be compressed, but don’t assume that
all flags are compressed. And yes, a flag –for instance let me say a BUFLAG– moves
down to consume sale orders; so the price can grow. So yes, it shares its nature
through a BULLISH CP. Therefore, a (continuous) BUFLAG can contain a
BULLISH CP M5/M1 (compression to demand).
Just don’t assume that all flags work. All CPs don’t work either. A BUFLAG can be
broken southward and not all compressions can be reasons to pull the entry trigger
(This is one of the reasons I studied the BREAKOUT article written by TYOON.
Don’t forget that even a CP can fail). I hope this was helpful.

Other examples and the masters’ opinions on them:

OKAMI says:
Thank you very much, WHITEOUT. Now I understand what’s going on. I say a flag
is a pattern, while CP is not exactly a patterns but a price behavior that has the
property of clearing supply and demand; so it clears the way for its next moves.
Therefore, a flag can contain compression. I will pay more attention to flag/CP and
their connections.

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Another example in which compression can fail:

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A beautiful example from Ms. MEL:

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TAKEN OUT: Price has filled the sale orders in previous support/resistance zones.

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CPLQ zones are weak areas that can be easily cut by the price.

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We read some explanations written by Benhur on CPLQ:

CPLQ is when price is compressed toward supply and demand. We are faced with
liquidity at one point. That’s where the decision is made between buyers and sellers.
You can also argue that CPLQ is where no supply or demand is left and the price
can continue its path freely. Look:

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MEL says:
In the chart above, I see that you have specified some retests on supply and demand
zones; which is a way to clear the remaining supply and demand orders.
Remember that when we are faced with an important supply zone, ideally we can
see some compression in the upmove of the price toward the supply zone. By
compression in the upmove, I mean that the buyers have to spend all their money in
the upmove. And when we are faced with an important demand zone, ideally we

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consider getting close to that zone as a compression if the sellers spend all their
money in the compression’s path downward.
A quote from IF in this regard:
Compression means that the price has taken out or cleared the last decision point in
which there are still orders remaining.

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And Mel’s opinion:

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An example from IF along with the relevant explanations:

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IF’s opinion about one of the above figures:

IF says: you have to be very precise in compression. Don’t draw your CP line
through the untested levels.
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Ms. Mel asks one of the casual traders: Can you explain compression to me in your
own words?
And their response:
In my opinion, compression means that the price is moving up and leaving no buy
orders behind in this upmove, consuming all of them; or the price is moving down
and consuming sale orders in the downmove, leaving no sell limit pending on the
way down. Basically, the role of compression is to keep the way open for future
reversal actions so that the price can easily cut the CP PAZ.
I have some other points to mention about compression too. Please enlighten me if
I’m wrong:
1. A BuFlag in an uptrend in high timeframes is a valid CP in low timeframes.
2. A trend with a gentle slope and some deep pullbacks into it in a high timeframe is
identified as a valid compression.
3. Compression does not tell us which direction the price may go; it just tells us that
in case the price decides to return, it can have a big and rapid motion in the CP PAZ.
Now we read Ms. Mel’s response to this together:
Those were some very good explanations.
Compression is mainly about the price picking up and clearing supply and sale
orders in the upmove and clearing demand or buy orders in the downmove in a
compressed manner. In other words:
Compression means taking out supply pockets in the downmove and demand
pockets in the upmove to clear orders.
Regarding Point 1, I can say: If you see compression in a high timeframe, that’s the
timeframe the compression is in. You can have CP in high timeframes and cleared
supply and demand levels in low timeframes.
About Point 2: Yes, that is correct. If you see pockets of supply and demand being
taken out, it is correct.
About Point 3: You always need to see the bigger picture drawn out in front of you.
I never look only at a CP in the middle of the chart.

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The point is: If you see a FRESH DEMAND LVL that price is getting close to in a
compressed manner, it’s a good sign that the price will return from that demand
level.
Although, if you see an UNFRESH DEMAND LVL which has been tested many
times and the price is moving down toward it in a compressed manner, you should
wait to see if the price will break that area downward or it will move back up. But
in general, compression is compression! ;-))) Price changes with time. If the price
clears the supply and sale orders in a compressed manner on its way down to the
demand level and then reaches and breaks the demand level, that CP is still valid;
not now, but for later. This means that the validity of CP does not dissipate, but
transfers from one time to another.
The translator added this last sentence himself ;-)
Continuing the discussion:
What is important to Mr. IF is that we know what happens to price when it enters
the compression area.
Another example:

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Another point to discuss about compression in a BEFLAG is that when the buy
orders are filled and consumed and price enters a fresh supply zone in a compressed
manner, it can easily cut this zone downward on its way back to the edge of the CP
PAZ.

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In the figure below, all buy orders in the upmove are cleared in a compressed manner
and in the form of a BEFLAG; therefore, the price easily cuts the CP PAZ on its way
back from the suitable supply zone.

What is important is that we know which upcoming levels the price will ignore or
consume. Figuring that out is only possible through PA.
Another viewpoint on price compression is this:
Price compression is basically gathering orders or distributing them; which depends
on the direction the market is moving in. So we are on the path to a supply zone and
the major traders are ready to adjust their sale orders in enormous volumes
immediately after price reaches the supply zone. They allow the price to have small
spikes downward as it is moving up. Minor traders buy these lower rates, which
allows the major traders to filter their sale orders; because now there is someone on
the other side of the market to buy them. If they do not create this price dynamic,
they will be filled with fear and lose their money. Having all of these sale orders
already in the market for when they reach the supply zone means that the last order
that shoots price down probably gets quite a bad fill, but it doesn't matter because

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they already have lots of other sale orders sat in the market which will be gathering
a nice profit.

And in the following:

#343
So the practical reason of why a QM works is not that the Big Boys have placed their
orders up there; but it is that they have created an enormous number of sale orders
on the way that they haven’t closed yet. The price is enhanced toward the second
peak (a large number of purchases is made by novices). When the price gets there,
the Big Boys empty their luggage and break the price down.
Another example:
#351

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In the following, we read a post by Okami:

#356:
I have read Mr. RED’s explanations on the definition of compression and it is
different from flag. This is what I’ve found out. In an uptrend:
1. Compression means that the price is moving up toward supply; but creates
shadows southward to fill up small demand pockets. But why?
Because:
1.1. These small pockets of demand will make the price reach the supply.
1.2. The downtrend is cleared of buy orders and makes the price have a very rapid
and strong drop on the way back after it reached the supply. These clearing of orders
is what we call “consumption”.
1.3. Big money starts to sell slowly to these demand orders. So through compression,
Big Money also find liquidity to fill their big orders.
2. Compression is a reversal signal; because it shows how the price clears the way
for its own return.
3. Flag means that the price is moving down; in a way that it stops the momentum
in an uptrend; but has a spike (shadow) towards the north. But why?
In order to:
3.1. Clear supply orders so that the price can provide a way to move upward. And
again the consumption case occurs.
3.2. Get the price to a more suitable demand zone so that it can start its uptrend with
a cheaper price (???).
4. Flag is a continuing pattern, since it opens the way to continue upward by clearing
sale orders.
So the nature of both –CP and flag– is consuming orders. It seems that it is very
important to know why the price needs to consume orders.
1. Because orders need to be consumed in order to find a mutual point to reach
liquidity and other fundamental concepts.
2. For the price to move faster and better, there should be no orders standing in the
way of the momentum. Therefore, orders need to be cleared either by CP or flag.
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Continuing:
#366:
Oedipus99 says:
Compression on its own is neither a continuing nor a reversal pattern. Compression
–in simple words– is the consumption of the buy orders of novices (in the example
above). The shadows are longer underneath the candles; because the Big Money are
pulling the price to find buy orders and then go back to fill their sell positions. The
candles move down to find buy orders and swallow them; which facilitates a
decreasing motion toward the north. In the end, there are fewer and fewer numbers
of buy orders left, which creates a compression for us. We do not know if the price
will drop immediately into this area; we just know that this area is now empty of buy
orders. So in the next stage, when the price finds a strong supply zone and retests it
from above, we know that there are no (or an insignificant number of) buy orders on
the way of dropping into this zone.
The question is:
1. If the buy orders are consumed and price is increased, it means that novice buyers
are making a profit. I was under the impression that the Big Money don’t make
mistakes and novices never act right; but is this theory not true in this one case?
Or there is no other way for the Big Money to fill up their orders and reach their
goals.
2. The Big Money removed the buy orders like this and it cost millions to do; so it
isn’t likely to be forgotten regardless of how long it takes for this area to be revisited.
So once this area of compression is complete, revisited and passed through, is this
area now irrelevant? Will the whole compression cycle start again here just as likely
as anywhere else?

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Another example:

Another question asked of IF:

Are DBD/RBRs stronger than RBD/DBRs?
IF says in response:
These are all about decision points. Decision points inside flags and poles.

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Another example:

Another example:
#372:

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So at point A in the chart above, we see that longer shadows exist above the candles.
This is not compression; it is a consumption, or at least a sign that the sale orders of
novices are consumed by the Big Money. The price is enhanced toward the sale
orders consumed by the Big Money, then hastily comes back and creates shadows.
After that, the price moves up and creates a buflag. Point B –which contains most of
the sale orders– is consumed exactly beneath the area where the supply has turned
into demand. As soon as the price touches this area –which is now filled with
demand, there are no sale orders left to enhance the price; therefore, point C is
created.
If you look to the left of the figure, there are also compressed areas that the price has
not visited yet; which means that the price can continue to improve until there are
no sale orders left (I’m not completely sure about this). The price has created three
long flags to reach another flag on the left side of the figure. It continues to increase
until the area on the left is compressed (or is a BUFLAG); i.e. there are no sale orders
left. The price stops when it hits a BEFLAG on the way up (where sale orders exist)
or where another pole exists.
Rufus says:

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Flag is a continuing signal; while compression is a reversal signal. Yes, both of them
consume (chew) demand in an uptrend. But flag is often pockets of orders being
consumed; while in CP, you usually take out layers of demand.
Ms. MEL’s opinion regarding the following figure:

Ms. MEL presents a design of her trading method in the following figure. She says
this is the same method that Mr. IF uses:

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As IF says, swap zones are areas that have been used as supply and demand in the
chart history.
In another figure, he talks about supply and demand zones:

Following that, he says:

In a compression, if all of the Ds are spiked and price breaks the low of the highest
D, the whole CP zone can be viewed as a pole; the base of which is inside the lowest
D of the CP.
Mr. Benhur says in the following:
#479:

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In order to better understand compression, you need to ask yourself: Why should I
pay attention to price compression?
For that reason, it is better if we are faced with a clear definition of compression.
Compression is when price moves away from a level (supply or demand) while
clearing orders on its way. For example, in compressed price action, the price moves
away from a demand zone and clears most of the buy orders on its way to the supply
zone. Why should we pay attention to this process? Because when price returns to
the compressed area, we can assume that there are very few orders left in its way
back. Therefore, when the price goes back and reaches the supply zone, we can say
that there are very few buy orders in the way that prevent price drop; because they
have already been cleared.

In the following, we read IF’s post together:

#486:
You are right.
We don’t know price has entered the compression in a compressed area until it
actually enters the compression area. A careful trader can wait for the price to enter
the compression area; then start to trade. But if the price enters a compressed area in
a higher timeframe, we would be happy to trade in that area. If the price skillfully
continues upward, it allows strong reactions in that zone. We always use
compression. For starters, I suggest that you only trade compressions to their suitable
zones in high timeframes. That way, you can use price compressions in other
situations too.

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Continuing:

Regarding compression, we read the opinions of another trader –by the name of
MADWT– in the RTM website:
#518:

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Chart trading is similar to a sports game. In sports, we need different tactics to use
in different parts of the pitch. Have you ever seen the Australian Rugby Football
League? If you have, what have you seen in the middle of the pitch? You’ve seen
mud, blood, and injuries among other things. It’s not where you want to present your
key action. You’d rather do that when you are close to the edge of the pitch. You are
not sure about displaying your key action in a random spot in the pitch. In trading,
your key display is the orders you place; and where you place them is the main
subject of our discussion. As a trader, we need to know the zones that carry
opportunities; the zones in the chart in which chance and luck agree with us. Strong
supply and demand zones create these opportunities for us. These zones are places
in which an action can be initiated; where we can show our key display. In a strong
supply zone, we expect there to be a vast number of sale orders and so the price
should drop. In a strong demand zone, we expect there to be a vast number of buy
orders that cause the price to increase. In our comparison to sports games, a team
can be placed in a very good area; but its key players might not be in the correct
positions to create golden opportunities. Although, when everything is in place, you
could expect something good to happen. When we are at a good position in the chart,
how can we know if luck is going to be our good companion? That is a very
important question. In other words, if we are at a significant level of supply and we
are ready to sell, what makes the price drop rapidly? The only things that can stop
price drop (from news to types of temporal markets, etc.) are buy orders that are
waiting to be consumed in order to increase price again or delay the drop. If there
are no buy orders to be consumed for the increase of price, the sale pressure in the
supply zone will cause a rapid drop in price. The price will be allowed to drop until
it nears a demand zone in which buy orders are waiting. This process can be
summarized as follows:
We want to sell in a strong supply zone if we know there are buy orders waiting to
be consumed when price is moving up to reach the supply zone.
We want to buy in a strong demand zone if we are sure there are sale orders waiting
to be consumed when the price is moving down.
We know when we are in a supply or demand zone and we can see that from the
chart. The problem is that we can’t see how many buy orders are below us and how
many sale orders are above us. However, we can visually venture an academic guess
based on the orders that are already consumed in that zone.
The visual identification of order consumptions is called compression.

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If price moves up and gets compressed, the buy orders on the way of compression
are consumed. If the buy orders are already consumed, there will be no order left to
lurk there. For example, when price gets close to a strong supply zone and a sale
pressure starts on the price, it has a clear way to return and penetrate its compression
path. The price is free to drop; because there are no buy orders left in its way; and it
continues to drop until it reaches a demand zone where buy orders are waiting.
Similarly, if price moves down and gets compressed when it nears a strong demand
zone, the sale orders on the downmove are consumed. If the sale orders are already
consumed, there are no sale orders left to lurk above the price; and the price enters
the compression area freely without any barrier in its path. This increase continues
until price reaches another supply zone in which sale orders are waiting.
According to these reasons:
An ideal return point for sale positions is a strong area of supply when the price
enters that area in a compressed manner.
An ideal point for buy positions is a strong area of demand when the price enters
that area in a compressed manner.
Knowing this, supply and demand zones are places where you should mark your key
display. And compression tells you it is the ideal location to enter. This is the same
reason why identifying and understanding compression is important for PA traders.

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In the following, we will see Mr. IF’s explanations regarding the figure below:

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#680:
In the following, we will read Mr. IF’s explanations on the figure below together:
I am sure that you (specifically novices) have heard this sentence before:
Sell when you think you should buy and buy when you think you should sell.

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Major traders here have placed a large number of hidden sale orders in the market
(they have sold in every new H in which compression has occurred). Then, they
increase the price higher than the recent Hs and with a high momentum. This scares
many of the weak sellers and drives them out; causing them to close their sale orders
and start buying. It also excites the breakout traders (buyers) –hehe, those are real
novices– and they start buying too. Right on the edge of the zone above, large
buckets of buy orders start filling their sale orders.
This is the same reason that we need to wait for an engulf when we trade price
compression. Either that or we should know very well where the next zone edge is;
so we can plan our trade based on it.

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Another example:

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According to Mr. Les-Paul, there should be no untested supply or demand in

compression areas. In case there is, the price will face barriers on its way back to
these zones.

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In the following, we read Mr. Benhur’s definition of compression:

In order to find CP, see how the price consumes the orders on one side as it crawls
toward the other side. Specifically:
Price crawls upward as it consumes demand. It crawls downward as it consumes
supply.

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Continuing, we read Mr. ARON’s post together:

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Guys, we have a combination of topics in the chart below. This is what I have seen.
A SR zone is broken; then, a clear FL is formed. I just love these types of FL. So,
the price is progressing downward in a compressed manner and it has created a LQ
right in the FL area. As soon as the price reaches the supply zone, we can see a neat
compression to the SR zone. Based on the chart history, I know that SRs are not
precise and I’d rather consider them as limits. So now, we have a compression to
SR. Do we touch trade this area? Or I think for starters, we’d better wait for the PA
signal in this area.

I have seen a 10-minute time chart on this. I’m not saying I have traded this situation;
but I was waiting for most of the main supply zones inside the compression area to
be engulfed. And as soon as that happened:

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Continuing with the next posts:

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I have seen this in many cases:

CPLQ and the reaction to its liquidity base:

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In reply to the previous figure:

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Continuing:

In the next figure, we will take a look at rounded numbers that create SR zones for
us. Also we will see how price nears these numbers in a compressed manner:

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And in a smaller scale:

Continuing:
In the one-hour timeframe, we see a compression in the specified area which shows
that most of the orders in that area are consumed. I have also specified a demand
zone in yellow which needs to be engulfed if I want to enter a trade. The price tries
twice and I see on the third try that price engulfs the area; so I will be looking for a
suitable entry position in a lower timeframe.

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The next chart shows a 15-minute timeframe in which I have determined my entry
region:

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In the following:

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Another example:

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Next chart shows a one-hour timeframe:

Continuing with another example from ARON:

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Continuing with another example from him:

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It is not my plan to trade virtual accounts. In the chart above, you see that the price
lies in a weekly demand zone; and I enter a lower timeframe to determine my entry
point. Finally after months of searching, I believe the one-hour timeframe to be
suitable for entry. First, we see a medium compression to the white area, which I
believe has cleared the supply orders; except for the yellow area which still remains
fresh. In my opinion, zone number 1 seems decent enough to consume the sale orders
in the yellow area. Also, we see a FL in zone number 2; so I place a buy order there
and I want a stop in zone number 3. Then, I see that the price has created a demand
base in number 3 and engulfs all my important zones. I place an order underneath
zone number 3 and the price won’t enter it (with a gap of 2 pips). After that, price
enters number 5 –which is at the end of the compression area– and forms a beautiful
CAP there. Since I thought there are still orders left where I had placed my buy order,
I didn’t clear the order; so the price entered it upon return and hit my target in zone
B.
Continuing:

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In the following:

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Regarding the following figure, Mr. Harry says:

It is not correct to call any set of shadows a compression. The way compression gets
consumed should be so clustered together that all the orders in that range are
devoured. In other words, the price should get close enough to its previous base. In
the above figure, the compressed area underneath is really great; however, there are
a few sale orders left around the base in the upper compressed area.

In the following, we will address an example from ARON in which he compares

compression strengths:

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Continuing:

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Again from ARON:

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More from him:

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More samples from him:

In lower timeframes:

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In the following, we see another example from him:

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The main point in compression is that we ask ourselves two questions:

Has the price consumed all the orders (placed on action bases) on its way up or down
or not?
Is the price getting close to a fresh area in this compression?
By answering these questions, we can have a better conception of price performance.

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Continuing the discussion, we will address ARON’s explanation on a friend’s post:

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Continuing:

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ARON’s explanations on a friend’s post:

In the following:

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Mr. Harry’s modifications of a friend’s homework:

Continuing with MIKEYWAY:

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ARON’s opinion on the figure below; followed by IN2FOREX’s modifications:

IN2FOREX:

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In the following, we see IN2FOREX’s post:

Lower timeframe:

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More from ARON and his opinion on another post:

Another post by IN2FOREX:

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ARON:

Continuing with IN2FOREX:

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According to Mr. Benhur, compression is not a signal on its own; but a sign of the
weakness of a zone.
The End

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