What Are Forex Supply and Demand Zones and How to Trade Them?

Today, we’re going to discuss one of the most important price action strategies in the Forex market: the Supply and Demand strategy. This method is widely regarded as one of the most reliable trading techniques. In fact, major banks frequently use this strategy, placing their orders around key supply and demand zones. By understanding and applying this strategy, traders can improve their chances of success in the Forex market. By identifying supply and demand zones on the chart, we can move alongside the banks and price trends to make profits.

Supply and demand areas on the chart

The areas on the chart where the price has dropped sharply are called supply zones, and the areas where the price has risen sharply are called demand zones. Whenever the price returns to a supply zone, it is likely to fall sharply again, and whenever it returns to a demand zone, it is likely to rise sharply again.

Supply Zone

On the chart, where the price has fallen sharply and strongly, and every time the price has reached this area and fallen again, we call it the supply area. When the market returns to the supply area, we expect the price to drop again and enter the downtrend, so we look for a selling position in this area.

Photo by TradingView

Demand Zone

When the price rises strongly and sharply, and the price rises again after returning to this area, we call this area the demand area. In the demand area, we wait for the market to return to this area, and at that time we prepare to open a buying position, expecting the price to rise again and increase.

Photo by TradingView

By mastering the identification of supply and demand zones, you can easily follow the market trend and profit from price increases and decreases. Understanding these key areas allows you to anticipate potential price reversals and make more informed trading decisions, leading to greater profitability.

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