Supply and demand zones are areas on a chart where price previously moved away sharply, taken to mark where sizeable unfilled orders may still rest. A demand zone is the base an impulsive rally left behind; a supply zone is the area a sharp sell-off originated from. Unlike a single support or resistance line, these zones are drawn as bands, recognising that buying and selling interest sits across a range of prices rather than at one exact level. Traders wait for price to return to an untested zone and show a reaction — a rejection wick, a reversal candle or a shift in momentum — before acting. A zone tends to weaken with each test, and a decisive close through it is normally treated as failure.
Supply and Demand Zones
Chart areas where price previously moved away sharply, drawn as bands and watched for reactions when price returns to them.
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