Supply and demand zones refine support and resistance. Instead of marking where price turned, you mark where it left in a hurry: the base from which a strong, fast move began.

Why fast moves matter

A sudden one-sided move suggests a large participant could not fill their whole order. Some of that interest may still be waiting at the same prices. When price returns, those resting orders can push it away again.

Identifying a zone

1. Find a strong move: several large candles in one direction with small wicks.
2. Find the base: the small candles or consolidation just before the move.
3. Mark the zone from the base's high to its low.

• A base before a strong rise is a demand zone.
• A base before a strong fall is a supply zone.

Freshness

Zones are strongest the first time price returns. Each revisit consumes some of the waiting orders. A zone that has been tested three times is weaker than an untouched one.

A simple plan

• Wait for price to return to a fresh demand zone in an uptrend.
• Enter on a reaction, such as a bullish candle closing inside the zone.
• Place the stop beyond the far edge of the zone.
• Target the nearest opposing supply zone.