Learn Supply and Demand Zones in Gold Trading
In this article, I will teach you how to identify supply and demand zones on Gold chart easily.
You will learn what are supply and demand zones and how to apply it in Gold trading.
In order to identify supply and demand zones on Gold chart, the first thing that you should do is to execute a complete structure analysis.
You should identify horizontal structures: support and resistance levels/zones; vertical structures - trend lines.
That's how a complete support and resistance analysis should look.
On a daily time frame, I have underlined all significant horizontal and vertical structures.
First, let's look for demand zones.
A demand zone is a specific area on a price chart that combines multiple key structure supports: horizontal or vertical ones.
Buying orders of the market participants will be placed within that entire area.
Our first demand zone will be based on a Horizontal Support 1 and a Vertical Support 1. A trend line and a horizontal support compose an expanding area.
We will call such an area a demand zone, simply because we assume that buying volumes will accumulate within that entire zone. And lower the price will move inside that area, more buying orders will become active.
Our second demand zone will be based on Horizontal Support 3/4/5.
All these structures are lying very close to each other. Some supports even have common boundaries.
These supports will compose a demand zone , a wide horizontal area where buying orders will be placed.
Vertical Support 2 is lying very closely to our Demand Zone 2.
A horizontal demand zone and a trend line will compose and expanding demand zone.
Now let's discuss supply zones.
A supply zone is a specific area on a price chart that combines multiple key structure resistances: horizontal or vertical ones.
Selling orders of the market participants will be placed within that entire area.
There is one supply zone on our Gold price chart. It will be based on a Horizontal Resistance 1 and Vertical Resistance 1.
Both structures are lying very close to each other.
We will assume that selling orders will be placed throughout that entire area and the higher the price moves within that, the more selling orders will become active.
Remember that you can identify Supply and Demand Zones on Gold on any time frame.
A bullish movement and a bullish reaction will be expected from a Demand Zone.
While a bearish movement and a bearish reaction will be expected from a Supply Zone.
Because Supply and Demand Zones are relatively large areas, it is very important to analyze a price action within these zones before you place a trade.
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