#CommunityAMA Forex trading using supply and demand zones is a powerful price action strategy that focuses on identifying areas on a chart where institutional buying (demand) or selling (supply) pressure is dominant, leading to significant price reversals or continuations. These zones represent imbalances between buyers and sellers, where large orders were previously placed. A demand zone is an area where strong buying interest previously entered the market, causing price to rally significantly. It's typically identified by a sharp upward move from a base or consolidation area. When price retraces back to this zone, traders anticipate a rebound as fresh demand comes in. A supply zone is the opposite: an area where strong selling pressure previously pushed price down decisively. It's marked by a sharp downward move from a base. When price rallies back to this zone, traders expect sellers to re-enter, causing a decline. To identify these zones, traders look for: * Strong Price Moves: A rapid, impulsive move away from a specific price area indicates that large orders were filled there. * Freshness: Zones that haven't been tested or revisited multiple times are generally considered stronger, as the unfulfilled orders are still likely present. * Timeframe: While zones can be found on any timeframe, higher timeframes (e.g., daily, weekly) typically identify more significant and reliable zones due to larger order flow. Traders use supply and demand zones for: * Entry Points: Going long at demand zones and short at supply zones, anticipating a bounce or reversal. * Stop-Loss Placement: Placing stop-losses just outside the zone to limit risk if the zone fails. * Profit Targets: Using opposing supply/demand zones or other technical levels as profit targets. This strategy requires patience, as traders wait for price to return to these key levels, and confirmation with other price action signals or indicators to increase trade probability. It's a method rooted in understanding market mechanics and the footprints of institutional money.