In Forex , the supply and demand zones are crucial concepts for understanding price movement and making informed trading decisions. A supply zone refers to a price level or range where selling pressure is strong enough to outweigh buying pressure, causing the price to potentially decrease. Conversely, a demand zone is a price level or range where buying pressure surpasses selling pressure, leading to a potential increase in price.

These zones are identified through historical price charts, where traders look for areas where the price has previously reversed or stalled. In a supply zone, the market has shown a tendency to decline when approaching this level, while in a demand zone, the market has a history of rising when reaching this level.

Traders use these zones to anticipate future price movements. For instance, when the price approaches a demand zone, traders might look for buying opportunities, expecting a potential bounce or rally. Conversely, when the price nears a supply zone, they might consider selling, anticipating a possible decline. Understanding these zones helps traders manage risk and identify potential entry and exit points, aligning their strategies with market dynamics.