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What Is a Supply and Demand Zone

A supply zone is the small stretch of prices a sharp fall began from; a demand zone is the stretch a sharp rise began from. Each is drawn as a band across the chart at the range of the base — the small candle before the move. This paper shows you a real demand zone drawn large, the two kinds and where their names come from, a demand zone and a supply zone on the daily chart, and where the zones are listed on your platform.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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The base and the move

A supply and demand zone is the small stretch of prices a sharp move began from. On 28 February 2025 the euro against the dollar drew a small candle, 60 pips from low to high — a pip being the fourth decimal place, the smallest step most people count in. From it, 3, 4 and 5 March rose 386 pips in three days. The small candle before the move is called the base, and the zone is the base's range, drawn as a band across the chart. Because a rise began there, it is a demand zone.

Two kinds

There are two kinds, and the names come from the orders thought to be waiting there. A supply zone is the base a sharp fall started from; afterwards it sits above the price, and the name pictures sellers' orders left on a shelf at those prices. A demand zone is the base a sharp rise started from; afterwards it sits below the price, and the name pictures buyers' money left at a counter. Both are drawn the same way, as a band at the base's range.

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