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Trading Strategies

What Is the Supply and Demand Strategy

The supply and demand strategy is built on a zone: the small candle the price left fast, marked as a band and watched for the price coming back into it. This paper shows you gold's 17 April 2025 base and the 92-dollar day that left it, from real bars; the idea as a shop shelf that ran out at one price; the zone and the return two days later on the daily chart; a supply zone, the same thing the other way up, on four-hour bars; and the rectangle that draws a zone on your platform.

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

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A small day, a big day, and the price back

The supply and demand strategy is built on a zone: a small candle that the price left fast, and the price's return to it later. Take gold in April 2025. On 17 April the day's body — the distance from its open to its close — was 16.85 dollars, against a 36-dollar average for the twenty days before. On 21 April the body was 91.63, and the price left the small day behind. The small day's whole range, 3283.92 to 3357.62, is the zone. Because the price left it on its way up, the strategy calls it a demand zone. On 23 April the low, 3260.07, was back inside it.

A shelf that ran out

Picture a shop shelf with three boards, one price per board. The middle board is where the goods ran out: on 21 April the buyers took everything on offer between 3284 and 3358 in a day, and the price had to move up to the next board, where goods were still on offer, to serve the rest of them. That is what a fast move away from a small candle means in the strategy's eyes — at that price there was nothing left to buy. The strategy marks the empty board and watches for the price to come back to it, because a shop that sold out at one price is where it looks for the same buyers again.

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