Identifying supply and demand zones on your charts can be a valuable trading tool. Much like support and resistance levels, these zones highlight areas where price is likely to bounce or reverse.
Traders rely on these zones to find potential entry and exit points. Essentially, supply and demand zones serve as an initial filter, helping you spot price levels with higher profit potential.
Support and Resistance vs. Supply and Demand
While supply and demand share similarities with support and resistance, there are key differences between the two. Support and resistance levels mark price reversal points, whereas supply and demand zones occur at the origins of strong momentum and trending moves.
The image below illustrates typical support and resistance zones, which highlight price turning points. Many traders find support and resistance challenging because price often reacts quickly at these levels, leaving few clear entry opportunities.
Supply and demand zones, by contrast, are identified around areas of consolidation that precede strong, explosive price moves. When the price later revisits these zones, it often reacts in a similar way. As shown in the screenshot below, during the downtrend, the price formed two supply zones. When the price returned to these zones, it moved lower again.
The 6 Tips for Supply and Demand Trading
While drawing support and resistance levels is relatively straightforward, identifying strong supply and demand zones can be more challenging. That’s why this article highlights six key tips—odds enhancers—that help traders differentiate between high-quality and weak supply and demand zones in their trading.
Get high-accuracy trading signals delivered directly to your Telegram. Subscribe to specialized packages tailored for the world’s top markets:
Free Crypto Signals Subscribe via Telegram
Free Forex Signals Subscribe via Telegram
Free VIP Signals (Gold, Oil, Forex, Bitcoin, Ethereum, Indices) Subscribe via Telegram
Free Trading Acoount Open With ORON LIMITED Signals (Gold, Oil, Forex, Bitcoin, Ethereum, Indices)
Open Account
Not profitable? Don’t worry! Join our copy trading system where we provide lower risk returns. Benefits of Joining Us:
-Lesser Risk as lot size is minimal
-Higher returns (approx. 5% to 10% monthly)
-Easy Deposit and Withdrawal with USDT using crypto wallets
-Lesser Drawdown
-Instant Support
-Invest Now and get guaranteed returns with us. DM us for more info❤️
-Start Now
*Copy Trading is free but we charge some percentage of profit as fees.*
Full VIP signals performance report for September 22–26, 2025:
1) Moderate Volatility
A strong demand zone usually shows tight price action before a powerful breakout. If the zone has many candle wicks and choppy back-and-forth movement, it’s less likely to be a high-probability area. Generally, the narrower the supply or demand zone before a significant breakout, the better the chances for a strong reaction when price returns.
Bonus tip: Before a demand zone forms, price often trades sideways in an accumulation phase (Wyckoff Theory), where “smart money” slowly builds large positions. A breakout from a demand zone built on such accumulation typically signals a high-quality zone linked to institutional activity.
2) Timely Exit
A quality supply zone features a brief consolidation period. These zones tend to be narrow and don’t last long. Short consolidation zones are ideal for spotting re-entry points during pullbacks, helping traders capitalize on renewed interest.
For example, when price spends only a few candlesticks moving sideways within a supply zone, it indicates a strong imbalance favoring sellers, as price quickly resumes its downward trend.
Bonus tip: This pattern is known as “drop base drop.” Shorter base phases usually signal a stronger overall downtrend.
3) The “Spring”
Coined by Wyckoff, the “spring” pattern is a price move in the opposite direction right before a breakout. It looks like a false breakout that traps traders into taking positions against the smart money. Institutional traders use springs to accumulate buy orders before pushing price higher.
In the example, a bearish spring in a demand zone tempts retail traders to sell, only for the price to surge upward, causing losses for those caught on the wrong side.
Get high-accuracy trading signals delivered directly to your Telegram. Subscribe to specialized packages tailored for the world’s top markets:
Free Crypto Signals Subscribe via Telegram
Free Forex Signals Subscribe via Telegram
Free VIP Signals (Gold, Oil, Forex, Bitcoin, Ethereum, Indices) Subscribe via Telegram
Free Trading Acoount Open With ORON LIMITED Signals (Gold, Oil, Forex, Bitcoin, Ethereum, Indices)
Open Account
Not profitable? Don’t worry! Join our copy trading system where we provide lower risk returns. Benefits of Joining Us:
-Lesser Risk as lot size is minimal
-Higher returns (approx. 5% to 10% monthly)
-Easy Deposit and Withdrawal with USDT using crypto wallets
-Lesser Drawdown
-Instant Support
-Invest Now and get guaranteed returns with us. DM us for more info❤️
-Start Now
*Copy Trading is free but we charge some percentage of profit as fees.*
Full VIP signals performance report for September 22–26, 2025:
4) Strong Force Leaving the Zone
When price exits a supply or demand zone with force, it shows a strong imbalance between buyers and sellers, resulting in explosive moves. The stronger the breakout, the better the quality of the zone and the more unfilled orders (open interest) likely remain, especially if the accumulation phase was brief.
Identifying zones before major price moves makes it easier to spot high-probability supply and demand zones.
5) Freshness
Always trade zones that are “fresh,” meaning price hasn’t returned to them since their formation. Each revisit fills more pending orders, weakening the zone’s strength. This principle also applies to support and resistance levels.
For example, a fresh demand zone created within a “rally base rally” pattern can slow or reverse a downtrend the first time price returns to it, showcasing the power of supply and demand trading.
6) Amateur Squeeze
This concept also applies to support and resistance trading and explains why many traders struggle with entries. Amateur traders often try to buy at support and sell at resistance, but price action rarely respects these levels perfectly, often overshooting before reversing.
In the example, price revisits a fresh demand zone but initially overshoots it with large wicks, triggering stop losses for amateurs. Although the price eventually moves in the anticipated direction, many amateur traders get shaken out.
Recommendation: Wait for a clear price pattern and a confirmed breakout from the zone before entering to avoid premature stops.
Get high-accuracy trading signals delivered directly to your Telegram. Subscribe to specialized packages tailored for the world’s top markets:
Free Crypto Signals Subscribe via Telegram
Free Forex Signals Subscribe via Telegram
Free VIP Signals (Gold, Oil, Forex, Bitcoin, Ethereum, Indices) Subscribe via Telegram
Free Trading Acoount Open With ORON LIMITED Signals (Gold, Oil, Forex, Bitcoin, Ethereum, Indices)
Open Account
Not profitable? Don’t worry! Join our copy trading system where we provide lower risk returns. Benefits of Joining Us:
-Lesser Risk as lot size is minimal
-Higher returns (approx. 5% to 10% monthly)
-Easy Deposit and Withdrawal with USDT using crypto wallets
-Lesser Drawdown
-Instant Support
-Invest Now and get guaranteed returns with us. DM us for more info❤️
-Start Now
*Copy Trading is free but we charge some percentage of profit as fees.*
Full VIP signals performance report for September 22–26, 2025:
