Crypto trading means buying and selling digital coins like Bitcoin$BTC
, Ethereum$ETH
, and others to make a profit. Prices in crypto markets often move up and down quickly. That is why traders use different tools and ideas to decide when to enter and exit trades. Two important concepts that help traders are the demand zone and the supply zone.
A demand zone is an area on a price chart where buyers are strong. When the price falls to this zone, many traders are willing to buy, so the price often bounces back up. It shows there is strong interest from buyers, like a floor that supports the price. Traders look for demand zones to plan their buy entries.
On the other side, a supply zone is where sellers are strong. When the price rises to this area, many traders want to sell, so the price often drops again. It acts like a ceiling that pushes the price down. Traders use supply zones to find good points to sell or short the market.
How to spot them?
A demand zone usually forms after a strong upward move when price paused or consolidated before jumping higher.
A supply zone forms after a strong drop when price stopped or moved sideways before falling further.
Traders often draw rectangles on their charts to mark these zones.
📈 Demand Zone Diagram
Price
^
| /\
| / \
| / \
| ________/ \______
| /
| /
|___________/
|
+-------------------------------------> Time
DEMAND ZONE
Explanation:
Demand Zone: The rectangle at the bottom shows where buyers step in.
When price falls into this zone, it bounces back up because demand is strong.
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📉 Supply Zone Diagram
Price
^
| ___________
| /
| /
| ________/
| /
| /
| /
|_____/
|
+-------------------------------------> Time
SUPPLY ZONE
Explanation:
Supply Zone: The rectangle at the top shows where sellers are active.
When price rises into this zone, it often reverses down because supply is strong.
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✅ How to use these diagrams:
Look for previous strong moves from these zones.
Mark the area on your trading chart.
Watch how price reacts when it returns to those levels.
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📈 Bitcoin$BTC Demand Zone Example
(Example Image for Illustration Only)
Explanation:
Price fell into the blue Demand Zone marked by consolidation before a big rally.
Buyers were waiting in this area.
When price returned, it bounced strongly again.
This is where many traders plan buy entries.
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📉 Bitcoin Supply Zone Example
(Example Image for Illustration Only)
Explanation:
Price rallied into the red Supply Zone where previous strong selling happened.
Sellers stepped in again, and price reversed down.
This is where traders look for sell or short opportunities.
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✅ How You Can Spot These Zones on Bitcoin Charts:
1. Look Left: See where big moves started.
2. Draw Rectangles: Mark the base of the move as a zone.
3. Wait for Price Return: Watch price action as it comes back.
4. Use Confirmation: Look for signs of reversal like wicks or volume.
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