Supply and Demand Zones

Supply and demand zones are areas on a price chart where a significant imbalance between buying and selling pressure occurred. A demand zone is where buyers were aggressive enough to push the price up, while a supply zone is where sellers were aggressive enough to push the price down.

These zones are often identified by sharp price moves away from a consolidation area. Unlike traditional support and resistance lines, these zones are areas of price, providing a more flexible approach to technical analysis.

They are rooted in the basic principles of economics and market microstructure. Traders use these zones to identify potential areas for high-probability entries.

By focusing on where the big moves started, traders can align their positions with the dominant market force. It is a fundamental method for mapping out market opportunity.