Supply and Demand Zones [Ranked]

The Supply and Demand Zones [Ranked] indicator is a comprehensive technical analysis tool designed to automatically identify institutional supply and demand zones while ranking them based on an internal "Odds Enhancer" scoring system. This allows traders to distinguish between low-probability areas and high-conviction institutional footprints using a standardized 1-7 scoring scale.

Usage

The indicator identifies zones by scanning for the Leg-In → Base → Leg-Out pattern. Once a zone is detected, it is scored based on three primary factors: freshness, departure strength, and base time. Traders can use these zones to identify potential entry and exit points, with higher-scored zones indicating stronger institutional interest.

Pattern Types The tool tracks four specific institutional patterns:

• DBR (Drop-Base-Rally): A demand reversal zone.
• RBR (Rally-Base-Rally): A demand continuation zone.
• RBD (Rally-Base-Drop): A supply reversal zone.
• DBD (Drop-Base-Drop): A supply continuation zone.

Zone Interaction Zones are tracked dynamically. A "fresh" zone (untouched) holds the highest score. Upon the first touch, the score degrades, and the zone is typically invalidated after two touches or if price breaks through the distal line (stop loss level).

Details

The script executes a multi-step process for zone classification:

1. Candle Classification: Candles are categorized as ERC (Extended Range Candles) if the body is ≥ 75% of the range, or NRC (Narrow Range Candles) if the body is ≤ 50%.
2. Scoring System:
   • Freshness (Max 3 pts): Untouched zones receive the full score; revisits reduce the ranking.
   • Departure Strength (Max 2 pts): Gaps away from the base score 2 points, while strong ERC candles score 1 point.
   • Base Time (Max 2 pts): Bases with 1-3 candles score 2 points; 4-6 candles score 1 point.
3. Validation: The tool automatically handles duplicate prevention by merging overlapping zones of the same type and provides auto-cleanup for broken or invalidated zones to keep the chart clean.

Settings

Detection

• Min Score to Show: Filters the display to only show zones meeting a specific ranking threshold (e.g., 5+ for confirmation).
• Max Zones on Chart: Limits the number of active zones displayed to prevent visual clutter.
• ERC/NRC Body %: Adjusts the sensitivity for candle classification.
• Max Base Candles: Defines the maximum width of a base before a zone is considered invalid.

Visual

• Demand/Supply Zone Colors: Customizes the colors for bullish and bearish zones.
• Show Labels: Toggles the display of pattern types, scores, and touch counts.
• Show Invalidated Zones: If enabled, broken zones remain on the chart in a greyed-out state.

FAQ

How do I interpret the zone scores? Scores range from 1 to 7. A score of 7 represents a high-probability "fresh" zone with a strong departure, often suitable for limit orders, while lower scores might require additional price action confirmation.

Why do some zones disappear? By default, the indicator removes zones once they have been touched twice or if price closes past the distal line (the far edge of the zone), indicating the zone is no longer providing support or resistance.

How can I access Supply and Demand Zones [Ranked]? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.