How To Draw Demand ANd supply zone

The bullish engulfing bar pattern is the opposite of the bearish engulfing bar, and it also consists of two candles,
the second one totally engulfs the first candle. When the bullish candle forms in a downtrend market, it could be considered as a reversal pattern, and when it forms in a trending market, it can be regarded as a continuation pattern.
When the bullish engulfing bar forms in a demand zone, it becomes a basing candle on which we draw the zones.
How to draw a demand zone using a bullish engulfing bar as a basing candle?
As you can see in the example shown,To draw a demand zone using a bullish engulfing bar as a basing candle, you only need to draw a proximal line at the close of the first candle, and a distal line at the lower shadow of the second candle
When the market goes back to test the zone, you need to wait for a price action pattern signal to validate the zone and place your trade.

To draw a supply zone using engulfing bars, you only need to draw the Distal line at the upper shadow or the close of the second bar.
And the proximal line at the close of the prior bar or the open of the prior bar if it is bullish As you can see in the chart example, the basing candle was a bearish engulfing bar. The second candle engulfed the real body of the prior candle, and to draw the supply zone,we draw a distal line at the upper shadow of the prior candle, and a proximal line at the open or in this case at the lower shadow of the first candle
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An inside bar pattern is a two bar in which the inside bar is smaller and within the high to low range of the prior bar.
The high is lower than the previous bar’s high. And the low is higher than the previous bar’s low, its relative position can be
at the top, the middle or the bottom of the prior bar.so how can we draw supply and demand zones using inside bars as basing candles?
When we identify a strong move made by a bank,like the one on the chart example, we look at the beginning of the move to draw the zone, if the beginning of this move started with a bullish inside bar, we simply draw the distal line at the lower shadow of the mother bar, and the proximal line at the close of the inside bar to get a potential demand zone.
When the market goes back to test the zone, we wait only for a confirmation signal to place our buy order.
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This is another example that shows you how to draw the demand zone using bullish inside bars.
simply draw the distal line at the lower shadow of the mother bar, and the proximal line at the close of the inside bar.
Look at first the move ? can you try to evaluate it ? yes sure if you are one of my students you will definitively say that
the move is made by a bank or a financial institution.because the move is quick and strong, and the candles are big. an other
creterion is the freshness of the zone and the risk to reward ratio.look at what happened when the market tested the zone.
as you can see, prices formed a nice pin bar to tell us that the zone is valid and all we have to do is to place our buy order.
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The bearish inside bar occurs either with the trend and it is considered a continuation pattern or at the top of an uptrend and
it is considered as a reversal pattern.When it happens in the beginning of a strong move (Bank order), it becomes a basing candle,
and it allows us to draw a supply zone.
as you can see in this example, the first inside bar was formed at the first supply zone, and to draw the zone, you only need to draw the proximal at the close of the inside bar and the distal line at the upper shadow of the mother bar.
When the inside bar (baby) is bullish, you draw the proximal line at the open of the candle.
When the market tested the zone, prices formed a nice inside bar that can be used this time as a confirmation signal.
as you can see the second move was very very strong which indicates that there is a bank behind this strong move down.
so we can consider the second move down as a bank order as well,and to draw the supply zone, we use the same inside bar as a basing candle.

The Doji candlestick pattern has a single candle, the closing and opening price of this candle are equal.
This candlestick pattern forms due to indecision between buyers and sellers in the market.
When drawing supply and demand zones, we can use a Doji candlestick pattern as a basing candle when it formed at the beginning of a strong move.To draw a supply zone using the Doji candlestick pattern, you only need to draw a proximal line at the lower
shadow of the candle, and a distal line at the upper shadow no matter what Doji variation it is.
As you can see in this example, we had a very strong supply zone.the first candle that was fored before the strong move down is the doji candlestick pattern. so it should be used as abasing candle to draw the zone.and to draw the supply zone, you simply draw a proximal line at the lower shadow of the candle, and a distal line at the upper shadow.

A supply or demand zone can only be seen once price speeds away from an area on the chart.
It indicates there was professional buying/selling interest at the origin of that move.
Once this has happened, our job is not to follow the novice traders and chase the move, but wait for price to return to the zone where we can buy or sell at a “wholesale” price.

A supply or demand zone can only be seen once price speeds away from an area on the chart. It indicates there was professional
buying/selling interest at the origin of that move. Once this has happened, our job is not to follow the novice traders and chase
the move, but wait for price to return to the zone where we can buy or sell at a “wholesale” price.

In the following pictorial representation of a demand zone, price dropped, made a base and rallied away very fast.
This indicates there was a lot of buying pressure at the base.So, if I were to ask you whether the big traders and banks all managed
to get their orders filled before this move?, the answer would be no. There would be a stack of buy orders all waiting to be filled once
price retraced back to the demand zone, which is where we too would be looking to buy.

Supply zones are the same concept in reverse. Price rallied, made a base and the traders couldn’t sell quick enough.
When price comes back to that supply zone, you want to be a seller!

There is another type of supply or demand zone which is in-line with the current flow. In this example the market drops,
forms a base and makes a 2nd speedy drop. The consolidation of candles that it leaves behind become our supply zone.
The reverse is true of demand zones – the market rallies, forms a base and makes a 2nd rally.

In order to draw a supply zone, position a horizontal line below the candle bodies. This will serve as your sell entry point.
Then draw a line across the highest candle wick. Your stoploss will go a pip or two above this point.

The opposite is true of a demand zone. Draw the top line (your entry) against the candle bodies. Draw the bottom line (your stoploss)
below the candle wicks

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