Supply and Demand Zones
Supply and demand zones show where institutions left unfilled orders.
The Concept
Supply Zone
- Where selling overwhelmed buying
- Price dropped sharply
- Resistance on return
Demand Zone
- Where buying overwhelmed selling
- Price rose sharply
- Support on return
Identifying Quality Zones
Strong Zone Signs
- Explosive departure
- Little time at level
- Fresh (not tested)
- Creates new high or low
Drawing Zones
- Find origin of move
- Zone = last candle before explosion
- Draw rectangle
- Extend to right
Trading Strategy
Aggressive Entry
- Enter when price touches zone
- Stop beyond zone
- Better R:R
Confirmation Entry
- Wait for rejection candle
- Less risk
- Slightly worse entry
Zone Rules
- Fresh zones strongest
- Each touch weakens zone
- Three touches = likely broken