What are supply and demand zones?

The supply and demand zones represent crucial areas on the charts where the price changes direction due to the behavior of buyers and sellers in the market.

When I talk about demand zones, I refer to those points where the price stops plummeting and begins to recover. This is where buyers enter strongly, willing to buy out assets, causing an upward momentum.

On the contrary, the supply zones mark areas where the price halts its rise and begins to retreat. At these points, sellers take control of the market, pushing prices down.

These zones work because the big players (whales) cannot execute their massive orders all at once. That's why the price often returns to these zones for them to complete their operations.

Methods to identify these zones

Order Block

I am fascinated by this method because it is based on the "footprints" left by large operators. I look for the last candle of the opposite color before a strong movement. For example, if I see a red candle just before a big bullish impulse, I mark that zone as an order block. It's there that they started to accumulate positions.

Fair Value Gap (FVG)

They are gaps that appear when the market moves sharply. I identify candles that leave spaces between the previous and next. These gaps are usually powerful zones, as the market will return to "close the gap" before continuing its trend.

Wyckoff Method

This approach studies how large operators accumulate or distribute positions. Accumulation occurs in sideways ranges before strong rises, while distribution precedes falls. When I see a sideways market, I wait for the breakout to confirm whether we are in a demand or supply zone.

Market profile analysis

Shows where the price has been most traded. The high activity zones (Value Area) indicate agreement on current prices, while the low activity zones signal potential imbalances.

Footprint (

The footprint charts reveal transaction volumes at each price. I'm looking for levels with large volumes, as they often coincide with zones where big players entered.

How to operate with these zones

1. Patience: I wait for the price to return to the zone identified.
2. Confirmation: I look for candlestick patterns, increased volume, or divergences.
3. Entry: I buy in demand zones and sell in supply zones.
4. Stop Loss: I place orders beyond the zone to protect myself.
5. Take Profit: I aim for nearby resistance levels for buy outs or supports for sales.

I have discovered that these zones are fundamental tools in my trading. They help me understand where the big players operate and how the market might react. Although they require practice, when combined with other analysis methods, they can yield surprising results.