4 Methods to Achieve Trading Success with Resilient Supply and Demand Zones

Table of Contents

Supply and Demand Zones are some of the most sensitive chart regions top technical analysts exploit for max gains. Learn how to use them like a pro today.

1. Introduction

Supply and demand theories have ruled the financial world for ages. Thus, it’s no surprise technical analysts earnestly incorporate them into proven trading strategies today.

Learn the essentials of such techniques in this article for mind-blowing results. As a perk, there’s also an exclusive indicator to streamline the process significantly.

2. Employing Supply and Demand Zones in Technical Analysis

The balance between buyers and sellers of instruments influences their prices in the financial markets.

With increased interest (demand) in tradable assets, the price typically rises (with all other factors being equal). Conversely, when the consensus is to sell, the supply increases, culminating in price falls.

Supply and Demand Zones
Supply and Demand Zones

Chart areas with a high probability of price reversals due to an asset’s shift from high to low demand (low to high supply) act like support and resistance points.

Their applications are one of the most debated concepts in technical analysis. However, seasoned traders have proven their efficiency over the years.

These zones can be strong or weak based on their potential to initiate a price reversal. The former includes those with higher probability, unlike the latter with lower probability.

Notwithstanding, this article focuses on the strong zones due to the high subjectivity of the reverse.

3. Practical Methods to Identify Strong Supply and Demand Zones

Unlike the fundamental analysts who subscribe to the supply and demand principle, chartists primarily concentrate on the chart for zones.

The widespread adoption of the discipline is responsible for several single and combined techniques, such as the following:

3.1 Volume Analysis

Top trading platforms typically grant traders access to the trading volume at various market price levels. It indicates the amount of trading activity (increased/reduced buying and selling) witnessed at a defined time.

Traders can view high-volume areas as potential supply-demand zones.

As market price gravitates toward them, traders prepare to counter-trend trade in hopes of a prolonged reversal.

This strategy primarily demands proper comprehension of the volume representation in one’s preferred platform. Misunderstandings will affect the results.

3.2 Price Action Assessment

Market technicians typically take note of price swings, order blocks, or wicks, considering them significant supply and demand zones. Such swings may be an all-time high or low within a defined period.

They indicate areas where market price should react to for the first time or may have reversed in the past.

Using Orderblocks for Supply-Demand Trading
Using Orderblocks for Supply-Demand Trading

Understanding volatility, multi-timeframe analysis, and asset selections, among other factors, are essential to get the most from this strategy. Hence, extensively utilize it in a simulated environment before live application.

3.3 Fibonacci Levels

The Fibonacci tool can also reveal strong supply-demand levels from anchorage on key price levels. Popular extensions from such include 23.6%, 38.2%, 61.8%, 78.6%, and 161.8% based on the Fibonacci ratios.

Veterans have confirmed that their solo application yields probable and highly profitable forecasts.

However, market forces trading with them becomes effortless when combined with other theories, like price action concepts (discussed earlier).

3.4 Indicator Signals

Another popular market forces trading approach is the application of technical indicators. Traders utilize several options, like the Moving Average, MACD, and RSI, in inventive ways.

For example, interactions between the candlesticks and Moving Averages can sufficiently signal a bullish or bearish reversal.

Similarly, the RSI has overbought and oversold levels many technical analysts consider for forecasts. Downtrends or uptrends are imminent when the former or latter is the case.

4. Bossing Supply and Demand Trading With a Top-Tier Technical Tool

Understanding the supply and demand theory is one thing; trading profitably with its technical approaches is another. Only a few boast consistent and accurate forecasts on live conditions.

However, anyone can join the clique with one revolutionary trading tool – the Supply Demand Pro for Tradingview.

Trading with the Supply Demand Pro
Trading with the Supply Demand Pro

It is an intuitive indicator that reveals the strongest in one glance. Succinctly, here are some of the benefits you will enjoy from its application:

  • First-hand knowledge of the most probable reversal chart areas
  • Improved understanding of applying supply-demand theory in trading
  • Freedom to go long or short with an awareness of the best trade exit points
  • Fastest trade entries and exits from timely TradingView alerts

Confirm these and many more advantages here to skyrocket your results now.

 

5. Conclusion

 

Supply and demand trading is highly recommended, as the approach stems from a solid principle in the financial world. Technical traders use zones in the chart to signify where the effect will be most significant, which can be strong or weak.

Volume analysis and Fibonacci retracement are some ways to discover these levels. However, the Supply Demand Pro provides the best signals predicated on the theory.

Please share this article with every aspiring trader across forums & social media and share your feedback in the engaging Comment Section below

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