In the world of price action trading, supply and demand zones play a pivotal role in identifying high-probability trade setups. But not all zones are created equal. The strength or weakness of these zones can significantly impact the accuracy of your trades. Let’s delve into the psychology behind strong and weak zones and how to identify them effectively.
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What Determines the Strength of a Supply/Demand Zone?
The key factor that determines whether a zone is strong or weak is how quickly the market reacts to that zone after its formation.
Strong Zones: Quick Reaction, Clear Intent
A supply or demand zone is considered strong when:
Orders are filled immediately after the zone forms.
Only one or two base candles are present before the price moves away sharply.
The market shows decisiveness, indicating institutional involvement or strong trader interest.
This quick reaction reflects the presence of significant unfilled orders, which suggests high demand (in a demand zone) or strong selling pressure (in a supply zone).
> Example: A demand zone where price drops, forms a single base candle, and then rallies immediately indicates a strong demand zone. Price respected the area with little hesitation.
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Weak Zones: Delayed Reaction, Uncertainty
A zone is considered weak when:
Price returns to the zone after one or two swings, rather than immediately.
There are more than two base candles within the zone, indicating consolidation rather than conviction.
The market takes time to fill orders, reflecting reduced interest or liquidity.
This behavior suggests that the zone has already been tested or lacks the order flow needed to push price strongly in the opposite direction.
> Example: A supply zone that forms after several candles of indecision and is tested after multiple price swings is a weak zone—less likely to produce a significant reversal.
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Checklist for Identifying Strong vs Weak Zones
Criteria Strong Supply/Demand Zones Weak Supply/Demand Zones
Reaction Time Immediate (just after formation) Delayed (after 1-2 price swings)
Number of Base Candles 1 or 2 More than 2
Order Filling Fast Takes time
Fibonacci Confluence If formed at a Fibonacci level, zone strength increases If formed at the other end of Fibonacci, zone weakens
Price Movement After Formation Sharp and impulsive Choppy or indecisive
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Conclusion
Recognizing the strength of a supply or demand zone is crucial for enhancing your trading edge. Strong zones offer more reliable entry and exit points due to their higher likelihood of price reaction. Weak zones, on the other hand, may require additional confirmation or be avoided altogether.
By observing how price behaves around these zones—especially in terms of timing, structure, and volume—you can align yourself more closely with smart money and improve your trade accuracy.
