Supply and Demand Zones
How to mark zones where buyers or sellers previously took control, and how to trade the first retest of a fresh zone with defined risk.
Supply and demand zones are price areas where aggressive buying or selling previously overwhelmed the other side. A sharp rally away from a base marks a demand zone; a sharp drop from a peak marks a supply zone. The stronger and faster the original move, the more significant the zone.
The highest-probability trade is the first retest of a fresh zone — one that price has not yet revisited. Enter near the zone with a stop just beyond it, so the zone's failure is your exit signal. After several tests, zones weaken as the resting orders get absorbed.
Be selective about which zones you mark. Zones formed on huge volume during a news-driven move deserve respect; zones drawn on quiet, random chop do not. Two or three well-chosen zones per stock beat a chart covered in lines.
Educational content — not financial advice.
Trading involves substantial risk of loss and is not suitable for everyone. Nothing on Momentix Trades is a recommendation to buy or sell any security, and educational content or AI analysis does not guarantee any outcome. You can lose money.