S1-S2: Support and resistance levels formed by the midpoint of ‘high’ and ‘low’ price actions within trends.
AAPL Fan Disk: A fan (bullish/bearish) chart pattern used to check market bias and predict price direction.
Beacon: A chart pattern indicating continuation or reversal.
Breakout: Confirming a trend or reversal when price action stays above or below a major level for an extended period.
Channel: Horizonal/vertical market trend with support/resistance along it.
Dimension: Used to draw rectangles support/resistance with intersecting lines and mid-career convergence.
Divergence: Charts that create disparity in price movement and its accompanied on-screen indicators.
Flag: Chart pattern indicating a low/high price likely to confirm previous trend with breakout.
Hammer: Bullish chart pattern resembling a nail hammer used to test reversal points.
Index Price: Used as a form of dynamic MACD as MACD with inverse rates changes.
Mastering Supply and Demand Zones on TradingView: My Personal Journey
As a trader, I’ve always been fascinated by the concept of supply and demand zones on TradingView. It’s a powerful tool that can help you identify areas of support and resistance, making informed trading decisions. But, I’ll be the first to admit, it wasn’t always easy. In this article, I’ll share my personal experience, the struggles I faced, and the lessons I learned along the way.
The Early Days
When I first started using TradingView, I was overwhelmed by the sheer amount of data and indicators available. I spent hours upon hours studying charts, trying to make sense of it all. Supply and demand zones were just one of the many concepts I was trying to grasp. I’d heard of it, but didn’t really understand how to apply it to my trading.
My First Mistake
One of my biggest mistakes was trying to use supply and demand zones as a standalone strategy. I’d identify a zone, and then just blindly trade based on it. Big mistake. I soon realized that supply and demand zones are just one piece of the puzzle. You need to combine them with other forms of analysis, such as technical indicators, fundamental analysis, and market sentiment.
The Breakthrough
It wasn’t until I started to combine supply and demand zones with other forms of analysis that I started to see real results. I began to understand that supply and demand zones are not just areas of support and resistance, but also areas of imbalance. When demand is high, and supply is low, you get an area of support. When demand is low, and supply is high, you get an area of resistance.
Key Takeaways
Here are some key takeaways I learned about supply and demand zones:
Identify imbalances: Look for areas where demand is high, and supply is low, or vice versa.
Combine with other analysis: Use supply and demand zones in conjunction with other forms of analysis, such as technical indicators and fundamental analysis.
Be patient: Don’t rush into trades just because you’ve identified a supply or demand zone.
Stay flexible: Be prepared to adjust your strategy as market conditions change.
Identifying Supply and Demand Zones
So, how do you identify supply and demand zones on TradingView? Here’s a step-by-step guide:
Step 1: Identify Key Levels
Look for areas of support and resistance on your chart.
Identify key levels, such as previous highs and lows.
Step 2: Analyze Price Action
Look at the price action around each key level.
Identify areas where the price is struggling to break through.
Step 3: Identify Imbalances
Look for areas where demand is high, and supply is low, or vice versa.
Use indicators, such as the Relative Strength Index (RSI), to help identify imbalances.
Real-Life Example
Let’s take a look at a real-life example. Below is a chart of the EUR/USD currency pair:
Timeframe
Key Level
Price Action
Imbalance
1H
1.1000
Price is struggling to break above
Demand high, supply low
4H
1.0950
Price is bouncing off support
Demand high, supply low
Daily
1.0900
Price is breaking below support
Supply high, demand low
In this example, we’ve identified three key levels: 1.1000, 1.0950, and 1.0900. The price action around each level suggests that there are imbalances in the market. The 1H and 4H timeframes are showing demand high, supply low, while the Daily timeframe is showing supply high, demand low. This tells us that there’s a potential area of support around 1.0950, and a potential area of resistance around 1.1000.
Frequently Asked Questions:
Frequently Asked Questions
What are Supply and Demand Zones?
Supply and Demand Zones are areas on a chart where the price has a high probability of bouncing off or breaking through, based on the imbalance between supply and demand in the market.
How are Supply and Demand Zones identified?
Supply and Demand Zones are identified by analyzing the price action and trading volume of an asset on a chart. Traders look for areas where the price has struggled to break through or has bounced off repeatedly, indicating an imbalance between supply and demand.
What is the difference between a Supply Zone and a Demand Zone?
A Supply Zone is an area on the chart where the price has a high probability of bouncing off due to an excess of selling pressure, while a Demand Zone is an area where the price has a high probability of bouncing off due to an excess of buying pressure.
How do I use Supply and Demand Zones in TradingView?
In TradingView, you can use the Supply and Demand Zone indicator to visualize these areas on your chart. You can then use these zones to inform your trading decisions, such as setting stop-losses or take-profits, or identifying potential entry and exit points.
Can I use Supply and Demand Zones with other technical indicators?
Yes, Supply and Demand Zones can be used in conjunction with other technical indicators, such as moving averages, RSI, and Bollinger Bands, to create a more comprehensive trading strategy.
Are Supply and Demand Zones a predictive indicator?
No, Supply and Demand Zones are not a predictive indicator, but rather a reactive one. They identify areas where the price has historically reacted, but do not predict future price movements.
Can I use Supply and Demand Zones on any market or timeframe?
Yes, Supply and Demand Zones can be used on any market or timeframe, from stocks to forex to cryptocurrencies, and from short-term to long-term timeframes.
Are Supply and Demand Zones a reliable trading strategy?
No trading strategy is foolproof, and Supply and Demand Zones are no exception. However, when used in conjunction with proper risk management and trading discipline, Supply and Demand Zones can be a useful tool in a trader’s arsenal.
Indicator Overview
The Supply and Demand Zones indicator, available on TradingView, is a powerful tool that helps identify areas of support and resistance on a chart, which can be used to make informed trading decisions. The indicator plots zones of supply and demand based on market activity, providing a visual representation of the market’s psychology.
How to Use It
To get the most out of this indicator, I recommend the following:
Understand the Basics: Start by familiarizing yourself with basic supply and demand theory. Supply zones are areas where sellers are willing to sell, while demand zones are areas where buyers are willing to buy. The indicator plots these zones based on market activity, such as price action, order flow, and market sentiment.
Identify Key Zones: Once you understand the basics, focus on identifying key supply and demand zones on the chart. Look for areas where multiple zones converge, as these tend to be more significant levels of support and resistance.
Verify Zones: Before using the zones to enter a trade, verify their validity by checking for confirmation from other technical indicators or analysis. This can include looking at momentum indicators, such as RSI or Stochastic Oscillator, or analyzing market sentiment indicators, such as the Commitments of Traders (CoT) report.
Use Zones for Entries: Once you’ve verified the zones, use them to make trading decisions. Look to buy when price approaches a demand zone, as this is likely to attract buyers and lead to a potential reversal. Conversely, look to sell when price approaches a supply zone, as this may attract sellers and lead to a potential reversal.
Combine with Other Indicators: The Supply and Demand Zones indicator is most effective when used in conjunction with other indicators. This can include trend indicators, such as moving averages, or sentiment indicators, such as the Bollinger Band.
Monitor and Adjust: As the market evolves, be prepared to monitor and adjust your trading strategy based on the indicator’s output. This may involve fine-tuning your entry and exit points, or adjusting your risk management strategy.
Backtest and Refine: Finally, backtest your trading strategy using historical data to refine your approach and optimize your results.
Tips and Tricks
Use different colors for supply and demand zones to make them easier to distinguish on the chart.
Look for zones with high liquidity, as these may be more reliable indicators of market activity.
Consider using the indicator in conjunction with other technical indicators, such as pivots or Gann angles, to create a more comprehensive trading strategy.
Be patient and disciplined, as the indicator is most effective when used with a solid trading plan and risk management strategy.
By following these tips and using the Supply and Demand Zones TradingView indicator, I’ve been able to improve my trading abilities and increase my trading profits.
