as the title says, what shows you a high probability supply & demand zone compared to a low probability one.
- Supply and Demand Zones Explained:
- Supply zones form when the market is poised for a downtrend. In these zones, there’s an excess of goods or securities available, leading to an expectation that prices will decrease.
- Conversely, demand zones emerge when the market is on the brink of an uptrend. Here, there’s heightened interest or demand, and prices are likely to rise1.
- High Probability Supply and Demand Zones:
- Reversal zones are the ones you should focus on. These zones are formed by banks and other large traders placing significant buy and sell positions.
- In uptrends, demand zones tend to be reliable, while supply zones have a lower probability of working.
- Conversely, in downtrends, supply zones become higher probability, and demand zones should be approached with caution2.
- Key Considerations for Identifying High-Quality Zones:
- Context: Consider the overall market trend (uptrend or downtrend). Zones aligned with the prevailing trend are more likely to be high probability.
- Confluence: Look for zones that align with other technical factors, such as support/resistance levels, Fibonacci retracements, or chart patterns.
- Volume: Zones with significant trading volume are often more reliable.
- Freshness: New zones formed after a strong move are generally more relevant than older ones.
- Price Behavior: Observe how price reacts around the zone. Strong bounces or clear rejections enhance the probability.
1 Like
Awesome explanation, @Mondeoman!
I’m also gonna say that there are indicators that help you see those better. They rely on data and not just “hey look, that looks like a zone.”
I’m using Tradingview with an indicator called ICT concepts [LuxAlgo]. Give it a look.
A high probability supply and demand zone is typically identified by strong, decisive price movements away from the zone, often accompanied by high trading volume. Look for zones where price leaves quickly and doesn’t return immediately, as these indicate strong buyer or seller interest. Conversely, a low probability zone may show weaker, choppier movements and frequent retests, indicating less commitment from market participants.
1 Like