How to read the supply n demand price action?

<p id="isPasted">To read supply and demand price action, you need to be able to identify the price levels where supply overwhelms demand and where demand overwhelms supply. These price levels are known as resistance and support, respectively.</p><p>Resistance is a price level where sellers are more likely to step in and sell than buyers are to step in and buy. This is because there is a large supply of orders at that level. As a result, the price will tend to turn lower when it reaches resistance.</p><p>Support is a price level where buyers are more likely to step in and buy than sellers are to step in and sell. This is because there is a large demand for orders at that level. As a result, the price will tend to turn higher when it reaches support.</p><p>To identify supply and demand zones, you can look for the following price action patterns:</p><ul style="margin-bottom:0cm;" type="disc"><li style="margin-top:0cm;margin-right:0cm;margin-bottom: 7.5pt;margin-left:0cm;line-height:normal;font-size:15px;font-family:&quot;Calibri&quot;,sans-serif;color:#1F1F1F;background:white;">Long-wick candles:&nbsp;Long-wick candles indicate that there was a lot of buying or selling pressure at that price level, but that price was ultimately rejected. This can be a sign of a supply or demand zone.</li><li style="margin-top:0cm;margin-right:0cm;margin-bottom: 7.5pt;margin-left:0cm;line-height:normal;font-size:15px;font-family:&quot;Calibri&quot;,sans-serif;color:#1F1F1F;background:white;">Price reversals:&nbsp;Price reversals occur when price changes direction after reaching a certain price level. This can be a sign that supply or demand has overwhelmed the other side.</li><li style="margin-top:0cm;margin-right:0cm;margin-bottom: 7.5pt;margin-left:0cm;line-height:normal;font-size:15px;font-family:&quot;Calibri&quot;,sans-serif;color:#1F1F1F;background:white;">Multiple touches:&nbsp;Multiple touches of a particular price level can indicate that there is a lot of support or resistance at that level.</li></ul><p>Once you have identified supply and demand zones, you can use them to inform your trading decisions. For example, you could look to buy at support or sell at resistance. You could also use supply and demand zones to place your stop-loss and take-profit orders.</p>

<p id="isPasted">To read supply and demand price action, you must analyze a chart to identify zones where prices made a strong, sudden move, leaving behind a "base" of consolidation. These zones highlight where large institutional orders were executed, creating a significant imbalance of buyers (demand) or sellers (supply).&nbsp;</p><p><strong>How to identify and read supply and demand zones</strong></p><ul><li>Find the impulse leg: Look for a run of large candles that move almost straight up or down with little pullback. This shows one side winning decisively.</li><li>Mark the base: Trace the move back to the short area where the price paused or consolidated just before the strong impulse. This base is where the large orders were placed.</li><li>For a demand zone (bullish), the price drops, pauses in a base, and then rallies sharply. Mark the zone from the low of the base candles' wicks to the highest closing price of the base.</li><li>For a supply zone (bearish), the price rallies, pauses in a base, and then drops sharply. Mark the zone from the highest wick of the base to the lowest closing price.</li><li>Wait for the retest: After the initial strong move, the price will often return to the zone to fill the remaining institutional orders. This is your high-probability entry point.</li><li>Confirm the reaction: Look for confirmation that the zone is holding when the price returns. Signs include long wicks rejecting the zone, a slowdown in momentum, or reversal candlestick patterns. </li></ul><p><strong>Key signs to look for</strong></p><ul><li>The strength of the move away: The more explosive the departure from the base, the more powerful the underlying imbalance and the more reliable the zone is considered.</li><li>Freshness of the zone: Untested zones are typically stronger, as they still contain the original, unfilled orders. A zone that has been retested multiple times becomes weaker.</li><li>Volume analysis: An accompanying spike in trading volume during the initial strong move confirms institutional participation, adding strength to the zone.</li><li>Higher timeframe validation: Confirming zones on a higher timeframe (e.g., daily or 4-hour chart) adds reliability and filters out noise from lower timeframes. </li></ul>