📊 What Is Supply & Demand?
Supply and Demand are important concepts in technical analysis used to identify areas where selling or buying pressure may increase.
Simply:
🔴 Supply = Selling Area
An area where selling pressure may increase.
🟢 Demand = Buying Area
An area where buying pressure may increase.
🔴 What Is a Supply Zone?
A Supply Zone is an area where price previously experienced strong selling pressure and moved significantly lower.
Example:
Price enters an area → Selling pressure increases → Price moves strongly downward.
When price returns to this area, traders may consider it a Potential Sell Area.
🟢 What Is a Demand Zone?
A Demand Zone is an area where price previously experienced strong buying pressure and moved significantly higher.
Example:
Price enters an area → Buying pressure increases → Price moves strongly upward.
When price returns to this area, traders may consider it a Potential Buy Area.
🔥 Supply & Demand + Displacement
A strong departure from a zone can increase its significance.
Bullish:
Demand → Strong Bullish Displacement → BOS
Bearish:
Supply → Strong Bearish Displacement → BOS
A strong move that breaks market structure can provide additional confirmation.
📌 Supply & Demand + Market Structure
Supply and Demand should not be used in isolation.
A potential bullish sequence:
Liquidity Sweep → CHoCH → Displacement → BOS → Demand → FVG → Potential Buy
A potential bearish sequence:
Liquidity Sweep → CHoCH → Displacement → BOS → Supply → FVG → Potential Sell
⚠️ Important
Not every Supply or Demand Zone will cause price to reverse.
Price may:
• React from the zone
• Partially enter the zone
• Completely break through the zone
• Move through it with little reaction
Therefore:
Supply ≠ Guaranteed Sell
Demand ≠ Guaranteed Buy
🎯 How to Identify a Stronger Zone
Consider:
1. Displacement
A strong move away from the zone.
2. BOS / CHoCH
A meaningful change or break in market structure.
3. Liquidity
Liquidity located around or near the zone.
4. FVG
An imbalance created during the move away from the zone.
5. Higher Timeframe Structure
Alignment with the higher-timeframe market structure.
6. Fresh Zone
A zone that has not been repeatedly tested.
🧠 Summary
🔴 Supply = Area where selling pressure may increase
🟢 Demand = Area where buying pressure may increase
Supply + Liquidity + Structure + Displacement
can create a higher-quality potential sell area.
Demand + Liquidity + Structure + Displacement
can create a higher-quality potential buy area.
Ultimately:
Location → Liquidity → Market Structure → Displacement → Confirmation → Entry
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1September 6, 2026 4
