Price Location
Demand Zone
A price area where buyers overwhelmed sellers, causing a sharp move up
A demand zone forms when there is a volume imbalance in favor of buyers. It is identified by finding the last bearish (sell) candle before a sharp, impulsive move to the upside. The zone is drawn from the high to the low of that pivot candle. When price returns to the demand zone, buyers are expected to re-enter, pushing price higher again. Demand zones at the extreme of a structural range are the strongest.
✓How to Recognize
- •Sharp move down followed by an impulsive move up
- •Last sell candle before the impulsive move up is the pivot
- •Zone drawn from high to low of the pivot candle (including wicks)
- •Strong volume candles departing the zone confirm institutional interest
⚡How to Avoid
- →Drawing zones where there is no clear impulsive move away
- →Using zones that have already been tested and broken
- →Ignoring the difference between extreme and decisional zones
- →Expecting every demand zone to hold without confluence