How to draw supply and demand zones

Supply and demand zones are not strategies themselves, but they are one of the most important things a successful trader needs to know. But why ?

As you most likely know, supply and demand zones occur all the time, on all timeframes and does not matter if we look at a random stock, forex pair, commodity… So it is definitely worth to learn and practice.

Here we can see that a zone was used three times plus when the price crossed the zone, we could see a pull back to the zone again. So here we had at least 2 or three opportunities to open a trade without knowing anything about the pair. Because these zones are used by banks, large organisations or even countries to open their positions, they are usually very strong and very profitable for them. If you can catch these moves, you have a gold in your hand.

But…how can we find it ? It does not work all the time of course, but we start looking for a zone where the price moved hard from and draw a zone there. After we create a zone, we wait for the price to come back and see what is going to happen. Many times the price just shoot over the zone and goes further so your opportunity is over. In that case you do not open your trade of course. However, if you see that the price reacted to the zone and you saw a confirmation of price reversal (pin-bar, double top, rising wedge…) you have a nice trading opportunity

This zone was very successful and very easy to see for an experienced trader. The price went down very strongly from a “zone” so we have drown it on the chart and when the price came back to the zone we could have seen a strong reaction to the downside from the zone

However, you really need to practice these zones and this strategy because in the beginning you do not see it and if you do, you think it must be profitable immediately. And. It does not have to.