Supply and Demand Zones [Clean v6]

The Supply and Demand Zones [Clean v6] indicator is an automated market structure tool designed to identify high-probability Points of Interest (POI) by highlighting areas of institutional buying and selling pressure. It dynamically manages zones to ensure the chart remains clean and relevant for real-time analysis.

Usage

The Usage section focuses on identifying key market areas where price is likely to react. Traders can use the script to find entry and exit points based on the following:

• Trend Following: By using the optional Zig Zag overlay, traders can determine market direction. In an uptrend, look for long opportunities within Demand zones; in a downtrend, look for short opportunities within Supply zones.
• Reversals: Unfilled zones from higher timeframes or historical price action act as significant Points of Interest (POI). Watching price action as it returns to these zones can signal potential reversals.
• Risk Management: The outer boundaries of the zones serve as natural invalidation levels. If price closes beyond the far edge of a zone, the structural premise is typically considered violated.

Details

The script utilizes a sophisticated zone management system built in Pine Script v6. It identifies pivots based on a user-defined Swing Length and creates rectangular zones at these peaks and valleys. To account for market volatility, the height of each zone is dynamically calculated using the Average True Range (ATR).

A key feature is the "Break of Structure" (BOS) logic. When price closes beyond a zone's invalidation level, the script automatically removes the active zone and replaces it with a subtle "Broken" marker. This prevents chart clutter and ensures traders only focus on active supply and demand levels.

Settings

Supply/Demand Settings

• Swing Length: Controls the sensitivity of pivot detection. Lower values identify local structures (scalping), while higher values identify major trend levels (swing trading).
• Max Zones to Keep: Limits the total number of historical zones displayed simultaneously.
• Zone Width (ATR Multiplier): Adjusts the vertical thickness of the zones based on current volatility.

Visual Settings

• Show Zig Zag: Toggles the market structure line to visualize higher highs and lower lows.
• Show Swing Labels: Displays "High" and "Low" text labels at identified pivot points.
• Supply/Demand/ZigZag Colors: Allows for full customization of the visual theme to match any chart background.

FAQ

How do I use the Supply and Demand Zones [Clean v6]?

You can use it to identify institutional POIs. Simply look for price reactions within the colored boxes for potential entries or use the outer edges for stop-loss placement.

What happens when a zone is broken?

When price closes outside the zone boundary, the zone is removed and a subtle trace is left behind to indicate a break of structure, keeping your chart organized.

How can I access this tool?

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