Price Action/Supply and Demand Zones

Supply and Demand Zones

Supply and demand zones are areas on the chart where a sharp move began, marking where large orders entered. A demand zone is where buying overwhelmed selling, and a supply zone is where selling overwhelmed buying.

By the ExecutionIQ team · Updated June 2026

Supply and Demand Zones price actionDemandSupply

What supply and demand zones means

Unlike a single support or resistance line, a zone is the price area that launched a strong, impulsive move, which suggests unfilled orders may still sit there. When price returns to that zone, traders watch for the same imbalance to push it away again, especially on the first retest.

How supply and demand zones is traded

  • Mark the base, the tight consolidation that preceded a strong move, as the zone.
  • Look for a reaction on the first return to a fresh zone, and be wary of tired, repeatedly tested ones.
  • Place the stop just beyond the far edge of the zone.
  • Favor zones that line up with the higher timeframe trend and structure.

Common mistakes

  • Trading old zones that price has already tested several times.
  • Drawing zones so wide they are meaningless instead of marking the tight base.

Watch: supply and demand zones explained

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