Supply and Demand Zones

The Supply and Demand Zones indicator automatically identifies key market levels based on aggregated synthetic candles, helping traders pinpoint potential reversal or breakout levels with clarity and precision.

Usage

The indicator can be used to identify institutional interest areas where price is likely to react. Traders can utilize these zones in several ways:

• Trend Trading: Use active zones as dynamic support or resistance areas to enter trades during trend pullbacks.
• Reversals: Monitor price action at untested zones for potential counter-trend setups.
• Breakouts: Track zone violations which often signal strong momentum or significant shifts in market structure.
• Confluence: Combine identified zones with other technical analysis tools like RSI or volume indicators to increase setup probability.

Details

This tool aggregates price data over a specific number of bars to create "synthetic candles." This process smooths out market noise and highlights significant institutional price activity. The logic detects bullish or bearish order blocks based on these synthetic structures:

• Demand Zones (Green): Formed when price breaks above the high of a previous bearish synthetic candle.
• Supply Zones (Red): Formed when price breaks below the low of a previous bullish synthetic candle.

Settings

• Aggregation Factor: Determines how many candles are grouped to form a synthetic one. Higher values provide a smoother view of market structure.
• Zone Extension (bars): Defines how many bars forward the zones will extend (up to 500).
• Show Supply Zones: Toggles the visibility of supply areas.
• Show Demand Zones: Toggles the visibility of demand areas.
• Delete Mitigated Zones: When enabled, removes zones once price has touched them. If disabled, zones remain but may change visual appearance to signify mitigation.
• Delete Broken Zones: Automatically removes zones once price has fully closed through them.
• Visual Customization: Individual color and border settings for both Supply and Demand zones.

FAQ

How do I access Supply and Demand Zones?

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

What are the best settings for different trading styles?

For intraday trading, lower aggregation values (3–5) are typically more effective. For swing or position trading, higher values (6–10) help capture broader market structures.

Does the indicator support alerts?

Yes, the script includes built-in alerts for new zone formation, price entering a zone, and zones being broken by price action.