What Is Demand Zone?
A demand zone is a price area where concentrated buying interest exists, identified by prior price action where a significant upward move originated. When price returns to this zone, institutional buyers who missed the initial move step in, along with unfilled buy orders, creating a floor of support.
How Demand Zone Works
Demand zones are identified by looking for strong bullish candles that initiated a significant rally. The zone spans the consolidation area just before the explosive up move. In crypto, demand zones often align with liquidation levels — when price drops to a demand zone and triggers long liquidations, the forced selling creates the final wave of supply absorption before the bounce.
Why It Matters for Traders
Trading demand zones provides excellent risk-reward because the invalidation level is clear (below the zone) and the target is the supply zone above. Fresh demand zones that have never been retested are strongest. Once a demand zone has been tested multiple times, it weakens — each retest absorbs more of the standing buy orders until the zone eventually fails.
