Supply & Demand Zones Explained: A form of Support & Resistance

Supply & Demand Clusters are a form of Supply & Demand Zones and price can commonly find Resistance or Support on them. For those who are new to Technical Analysis ; "Support" is a area on the chart price and demand (buying pressure) increases from, with "Resistance" being the opposite, with price decreasing and sell orders (Supply of asset) increasing from the latter.

This makes them a great tool for finding exit or entry points for trades. The above images show how a Supply or Demand cluster is identified and drawn on the Cryptocurrency market charts.

To draw and identify the Zones first we must find areas on the chart that look similar to a tightly squeezed together rectangle. Price should then make a "thrust" (major increase, or decrease in value) from this rectangular area. We use the Rectangle Tool to draw a zone across these areas.

When price revisits them (as you can see on the bottom image) it tends to react to it; giving traders a opportunity to capitalise on these movement's. They also are a useful tool for gouging Risk & Price targets as when one Zone is "claimed" price tends to head towards the next like a magnet; so they become ideal take profit & SL (Stop Loss) areas.

In this particular image we can see how ETH:BTC clearly had important price reactions to these areas; with the uptrend starting from the original Demand Cluster marked at the Bottom Left. As the Price Action progressed - each level was "claimed" until we saw a continuation upwards.
Demand ZoneSupply and DemandsupplyandemandzonesSupply ZoneSupport and Resistancesupportandresistancezones

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