Supply & Demand Zones

The Supply & Demand Zones indicator identifies potential reversal areas by detecting swing highs and swing lows to plot automated support and resistance zones.

Usage

The tool is designed to provide a minimalistic view of the market's most recent supply and demand levels.

• Supply Zones (SZ): Indicated by red horizontal lines with an "SZ" label. These areas represent swing highs where selling pressure has historically entered the market, suggesting potential resistance or consolidation points.
• Demand Zones (DZ): Indicated by green horizontal lines with a "DZ" label. These areas represent swing lows where buying interest has historically emerged, suggesting potential support or bounce zones.

Users can utilize these zones to identify entry or exit points, or as confluence with other methodologies such as Price Action, Smart Money Concepts (SMC), or volume analysis.

Details

The script functions by evaluating price action over a user-defined lookback period. It identifies a swing high when the current high is the highest value within the specified zoneLength, and a swing low when the current low is the lowest value within that same window.

To maintain a clutter-free chart, the indicator only displays the most recent supply and demand zones. When a new swing point is detected, the previous line and label for that specific zone type are deleted and replaced by the updated levels. The visual output uses wide lines to represent the area of interest and places labels ("SZ" or "DZ") to ensure clear identification.

Settings

• Zone Length: Determines the lookback period used to identify swing highs and swing lows. A higher value will result in more significant, longer-term zones, while a lower value will detect more frequent, short-term levels.

FAQ

How do I use the Supply & Demand Zones indicator?

You can use it to identify key levels where the price might react. Watch for price approaching "SZ" labels for potential shorts or profit-taking, and "DZ" labels for potential long entries or support.

What does "SZ" and "DZ" stand for?

"SZ" stands for Supply Zone, representing a resistance area created by a swing high. "DZ" stands for Demand Zone, representing a support area created by a swing low.

How can I access this indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.