Supply & demand zones
Demand zones
A demand zone is the base where price paused before a strong rally. Buyers were so aggressive that price left fast, and unfilled buy orders may still wait there. Price often reacts when it returns.
Supply zones
A supply zone is the mirror: the base before a strong drop, where sell orders may still be waiting.
Test yourself
Price paused here, then rallied hard. What kind of zone is the base?
Demand zoneThe base before a strong move up is demand.
Price paused here, then dropped hard. What kind of zone is the base?
Supply zoneThe base before a strong move down is supply.
What makes a zone stronger?
A strong, fast move away from itA fast departure suggests big orders were filled there and some remain.
Each time a zone is revisited, it usually…
Gets weaker, as the orders there get used upFresh (untested) zones tend to react best.
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