Playbooks

What it is

A supply or demand zone is a small consolidation (a base) from which price left with an impulsive move. The idea: unfilled orders remain at the base, so price may react when it returns.

What to look for

• Pattern: rally-base-rally (RBR) and drop-base-rally (DBR) make demand; drop-base-drop (DBD) and rally-base-drop (RBD) make supply.
• Strength of departure: large candles, a gap or fair-value gap on the way out, and a break of the previous swing.
• Time at the base: fewer candles in the base is stronger.
• Freshness: an untested zone is better. Each return weakens it; a third test is usually the last.
• Location: demand in the lower part of the range or trend, supply in the upper part. A zone that agrees with the higher timeframe is worth more.

How to mark it

• zone kind demand or supply, from the base's extreme wick (the distal edge) to the body edge (the proximal edge). Set fromTime at the first candle of the base, and label with the timeframe and freshness (D 1H fresh).
• marker on the impulse candle that proves the departure.
• zone kind fvg if the departure left a gap inside or above the zone.
• At most two or three zones each side of price. Prefer the fresh ones nearest to price.
• position only for a concrete scenario.

Scenario logic (analysis, not advice)

• Entry idea: the proximal edge of a fresh zone, or a lower-timeframe reaction inside it.
• Stop reference: just beyond the distal edge plus a small buffer (about 0.1 to 0.25 ATR).
• Targets: the opposite zone, then the nearest swing.
• Give the reward-to-risk. If it is under 2:1, say the scenario is not attractive.

Invalidation

A candle body that closes through the distal edge. A zone tested three or more times. A higher-timeframe zone against it.

Pitfalls

Wide zones hide bad risk-reward. If the zone is wider than about one and a half ATR, use the lower timeframe to narrow it, or say it is too wide to be precise.