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Supply / Demand Zone Trading Cheat Sheet

This document provides a "cheat sheet" for trading supply and demand zones in the forex market. It describes how to identify when price will respect a supply or demand zone versus reject it based on candlestick patterns like smaller bodies and wicks. Specific signals like changing candle colors and momentum shift candles are outlined. The document also provides guidance on what qualifies an area as a strong supply or demand zone, like recent swing highs and lows or acting as both support and resistance. Additional confirmation factors like moving averages and Fibonacci retracement levels are also mentioned.

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711 views2 pages

Supply / Demand Zone Trading Cheat Sheet

This document provides a "cheat sheet" for trading supply and demand zones in the forex market. It describes how to identify when price will respect a supply or demand zone versus reject it based on candlestick patterns like smaller bodies and wicks. Specific signals like changing candle colors and momentum shift candles are outlined. The document also provides guidance on what qualifies an area as a strong supply or demand zone, like recent swing highs and lows or acting as both support and resistance. Additional confirmation factors like moving averages and Fibonacci retracement levels are also mentioned.

Uploaded by

Itsme
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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SUPPLY / DEMAND ZONE TRADING CHEAT SHEET @PAVLeader

If you have read my previous knowledge article on Supply & Demand zone, then this article will strengthen
your concepts further. We know the supply/demand zones are critical to Price Action trading & price reacts
to these areas really well - sometimes by honoring & sometimes by penetrating through these zones. To
increase our win rate we must know when they will be respected & when they will be rejected. The primary
condition is these should be well established Supply or Demand zones, which means at least 2 times Price
should have respected these levels. Below table will act as a cheat sheet to trade the same -

Description of What to watch when price What to watch when price


Price Behavior reaches near Supply Zone reaches near Demand Zone
Momentum Loss Candle size gets smaller Candle size gets smaller
Body Size Body size get smaller Body size get smaller
Wicks Upper wicks start appearing Lower wicks start appearing
Long Wick Rejection Candles Long upper wicks shows price rejection Long lower wicks shows price rejection
at or above the supply zone. More such at or below the demand zone. More such
candles in supply zone or coming from candles in demand zone or coming from
above the supply zone, stronger the below the demand zone, stronger the
signal signal
Candle color change Candle color start changing from Green Candle color start changing from Red to
to Red Green
Final Momentum shift candle Finally, if the price rejects the supply Finally, if the price rejects the demand
zone, you will see bearish momentum zone, you will see bullish momentum
candle closing below previous day low. If candle closing above previous day close
the same candle makes new highs & (close above high makes it stronger
then closes towards the lows then it is pattern). If the same candle makes new
even more stronger. lows & then closes towards the highs
@PAVLeader then it is even more stronger.
WHAT QUALIFIES FOR SUPPLY OR DEMAND ZONE @PAVLeader

How do you know whether an area or level qualifies to act as a Supply or Demand zone? Here are few
things you should look for –
1. Recent Swing high & Swing lows
2. Areas where multiple rejections have happened (more the better)
3. Areas which have acted as both support and resistance
4. Areas from where the price moved faster & farther
5. Area which was recently respected (in formation)

It doesn’t mean that you need to have all these 5 conditions to qualify an area as S/D zone but more
conditions, better it is.

For Confluence or additional confirmation you can use the below things –
1. Dynamic Support /Resistance (MA/EMA 21, 50, 100, 200)
2. Trend line break
3. Fibonacci retracement to 38.2%, 50% or 61.8%
4. Price rejection/reversal candlestick patterns
3. Large time frame confirmations - Monthly, Weekly, Daily
Hope this was helpful. Do practice this & get more confidence on this strategy. This is the most simple form
of Price Action trading but it acts as a most effective way if applied correctly.

Happy Learning, Happy Trading

From
@PAVLeader

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