The Adaptive Price Zone (APZ) is a technical indicator used to identify potential overbought and oversold conditions in the market. It was developed by Lee Leibfarth to adapt to changing market volatility, making it more responsive in dynamic trading environments.

APZ is composed of two bands surrounding a central price line. These bands adjust based on market volatility, widening during high volatility and narrowing when volatility is low. The distance of the bands from the central price line is determined by a volatility filter, often using the standard deviation of price over a certain period.

When the price moves above the upper band, it may signal overbought conditions, while movement below the lower band suggests oversold conditions. Traders use these signals to anticipate potential reversals or corrections in price.

The adaptive nature of APZ sets it apart from static indicators like the Bollinger Bands, making it more flexible in fast-changing markets. By identifying periods of extreme price movements, APZ helps traders make more informed decisions, whether it's to enter a trade or to adjust stop-loss levels, potentially increasing their trading accuracy.