Have you ever placed a Buy Limit at a specific Support line, only to see price dip slightly below, hit your **Stop Loss**, and then fly away? This happens because you are viewing the market as a "**Line**", while **Smart Money** views the market as a "**Zone**".
**Supply and Demand (S&D)** is the upgraded version of Support and Resistance. It focuses on finding the **exact origin of strong momentum**—where the banks left their footprint.
1. Zones vs. Lines: The Fundamental Difference
A zone represents an **Imbalance** between buyers and sellers, which acts as an area of waiting **Limit Orders**.
SVG 1: Supply & Demand Zones vs. Retail Lines (Risk Mitigation)
2. How to Draw the Zones Correctly (Proximal/Distal)
A zone consists of two critical lines that capture the full extent of the institutional footprint.
SVG 3: Zone Drawing Methodology (Proximal and Distal Lines)
**The "Base" Candle:** This is the last candle before the explosive move (e.g., the last Red candle before a massive Green candle explosion).
- **Proximal Line (Top):** The price closest to current price action (usually the top of the body of the base candle). This is your potential entry trigger.
- **Distal Line (Bottom):** The price furthest away (usually the bottom of the wick). This is your **Stop Loss Anchor**.
3. Zone Scoring: Strength, Freshness, and Risk
Not all zones are valid. Use this scoring system to filter for **high-probability trades** and manage risk:
SVG 2: The Zone Strength Test (Explosive Departure)
- **Strength of Move (Explosion):** We only want zones that show **explosive departure** (Price shoots away like a rocket).
- **Freshness:** Has price touched this zone before? **First Touch** = High Probability. **Third Touch** = Low Probability (Weakened zone).
- **Time at Base:** Less time spent consolidating in the base candle is **better**, as it shows huge imbalance.
4. The Safer Entry Strategy (Confirmation)
Do not place a Limit Order immediately unless the zone is exceptionally strong.
**The Safer Way (Confirmation Entry):**
- Wait for price to enter the Demand Zone.
- Switch to a lower timeframe (M15 or M5).
- Wait for a **Change of Character (CHOCH)** or a Break of Structure bullish.
- Enter on the pullback, placing SL **below the Distal Line**.
Final Thoughts
Supply and Demand is the logic behind why price moves. Stop guessing where support is. Look for the **Explosion** and the **Imbalance**. That is where the banks are hiding. Monitor the structural flow of the market via the Realtime Market Dashboard.
