Hi everyone
I just wonder, can a supply/demand zone be formed from a previous zone as in the picture below, or the ‘second peak’ touching the zone is regraded as a ‘bounce off’ only? the picture below shows the red zone crated from the previous zone, sorry the zones might seem incorrect to some of you but i hope that you understand the context of my question.
This looks like resistance respecting previous resistance. Which it doesn’t always. Nice how you’ve drawn resistance as zones, not lines. They look good to me.
As you’ve called it a supply/demand zone, is that because you think this is not a resistance zone or am I missing something?
S/D zones and S/R zones can occur at the same place. Both are subjective though depending on the rules you use.
@piter305 it is said that a S/D zone can be used more than once, and that they are “valid until they are not”. How do you determine your supply/demand zones?
Thanks for the answer. I just read on the net that if a supply zone is drawn and then price will come back to the zone and then bounces off the zone and even thou it looks like another supply zone was created, it is not regarded as one as it was formed from the previous supply zone.
Confused?
There is so much info on S/D zones, you sort of need to figure it out for yourself.
I use long, stand alone bars (preferably with a gap) with 3 smaller bars behind it, indicating some consolidation prior to the breakout. You can pretty well use any time frame, but I use 1 & 4hr. And these zones can be reused with my strategy, but not always so I keep previous zones open until price does not respect them anymore.
so you don’t distinguish between a peak that creates a zone and a retest of that zone. Could the retest create a zone of its own?
To me that would be support/resistance zones. Here’s that chart again with S/R marked out:
Yes, but only if it meets my requirements, which is a long bar with at least 3 smaller bars behind it. Otherwise, it is just price returning to that zone, which is what we are looking for. That chart shows one completed cycle of price returning to the supply zone.
What’s your definition of a supply or demand zone?
I must say that your way of thinking confirmed my observations. Thank you!
