Supply and Demand Indicator Guideline

Supply and demand zones indicator is a forex trading system in MT4. To clarify, it allows chartists to fast spot supply levels on their trading charts, based on ancient lows. Also, to visualize demand levels on the MetaTrader chart, based on past highs. Thus, the supply and demand zones MT5 indicator identifies price movements over time based on historical highs and lows. In short, this forex trading system aims to analyze market price fluctuation zones over time. Also, the supply and demand zones indicator is available on the Tradingview platform. So, our fx lesson will undertake the fundamentals of supply and demand trading in order to learn how to trade based on those factors.

Supply and demand indicator
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Supply And Demand Zones Indicator

What is Supply and Demand Indicator ?

Supply and Demand trading strategy is a popular forex traing strategy used to identify the accurate supply and demand zones of a currency pair. These zones are basic notions for forex traders. On the one hand, colored rectangles above any price level plot supply zones. On the other hand, rectangles below any price level display demand zones.

Supply and demand zones

How does it work ?

It is very simple to identify the supply and demand zones on your chart. Especially, when you own a S&D indicator in your MT4 platform. Each zone is drawn in a different color. The zone where there are sharp rises represents the supply zone, while where there are sharp declines represents the demand zone. Generally, a Supply zone represents an extreme High zone where the price has significantly shifted its direction from uptrend to downtrend. In contrast, a Demand zone represents an extreme Low zone where the price has significantly switched its direction from downtrend to uptrend.

Identifying supply areas

Supply zones occur before a downside movement. To clarify, these overbought zones happen at the end of a strong uptrend. Consequently, they indicate an ending uptrend movement. In other words, the supply zone is a downside pullback tool. That is to say, an uptrend ends and a new downtrend begins.
In addition, supply zones are called also distribution zones.

Offer area

Identifying demand areas

Demand zones happen before an upside movement. To explain, these oversold zones occur at the end of a strong downtrend. Consequently, they indicate an ending downtrend movement. In other words, the demand zone is an upside pullback tool. That is to say, a downtrend ends and a new uptrend begins. Moreover, demand zones are also called accumulation zones.

Demand area

Visually, Supply zones are established when the price booms considerably. Then it reaches a high base. At this Base, there is a price consolidation that may indicate potential Selling pressure. Finally, the price starts to drop. Whereas, Demand zones are developed when the price falls considerably. Then it reaches a low base. At this base, the price consolidates, which may indicate potential Buying pressure.

Strong Supply & Demand zones

There are two different approaches to judge S & D zones strength. The first one suggests that the less the zones are tested, the stronger they are. The second one takes into consideration swing highs and swing lows. To explain, swing highs are Lower highs and swing lows are Higher lows.

On the one hand, if the price makes swing highs near a supply zone, then that distribution area is a strong supply zone. On the other hand, if the price makes swing lows near a demand zone, then that accumulation area is a strong demand zone. Note that traders have to behave with caution with moderate and weak S & D zones. Because, other than reversals, they could help to trade breakouts.

Only experienced traders succeed to trade weak S & D zones!

Strong areas

How to trade with supply and demand tool ?

Supply and demand are basic concepts in the framework of supply and demand trading. This trading technique focuses on the volume of transactions on the trading instrument. In order to forecast the attraction of buyers for it. This happens because the desire of these buyers is the main driver of the price. As a result, the supply and demand trading technique recognizes two major zones on the Metatrader charts. That is to say, the supply and demand zones discussed above. In conclusion, supply and demand zones indicator can serve as entry and exit tool in MT5 platforms.

Supply example

Supply zones are price zones where supply is stronger than demand. As a consequence, this drives the price down. In fact, when supply is higher than demand, the price moves up. A Supply trading system means waiting for the price to reach these zones before shorting the trading instrument.

Supply trading strategy

Demand example

Demand zones are price zones where demand is more powerful than supply. consequently, this drives the price up. In fact, when demand is larger than supply, the price moves up. A Demand trading system signifies waiting for the price to reach these zones before performing a Long position.

Demand trading strategy

How to draw supply And demand zones ?

1. Metatrader 4 Platform

It is not difficult to draw supply and demand zones in the MetaTrader 4 platform. But just you need to follow the steps accurately.
The process of drawing the supply zone is similar to the demand zone. For the supply zone, you need to look at the left-hand side of the chart, of the prior high. On the other hand, for the demand zone, you need to look at the left-hand side of the chart, of the prior low. Therefore, these are the steps that you need to follow:

  1. Open the chart and take a look.
  2. To draw these zones you first need to choose the rectangle tool found in the “insert”.
  3. Discover the zone you want to mark and draw the rectangle. if you want to draw the supply zone look at the left-hand side of the prior high. Likewise, if you want to draw the demand zone look at the left-hand side of the previous low.
  4. Verify the start point of the strong rally.
  5. Paint two horizontal parallel lines. If you will draw the supply zone, you need to draw the first line at the high and the second line at the nearest close. Conversely, if you will draw the demand zone, you need to draw the first line at the low and the second at the nearest close.
How to draw S&D

2. Metatrader 5

Drawing supply and demand zones in the  MetaTrader 5  chart is similar to MT4. So you need to open your MT5 platform then click on “insert” then “shapes”. After that, choose “Rectangle” then draw accurately the zones.

How to draw zones

3. Tradingview

Drawing Tradingview supply and demand zones is a skill. In fact, many chartists fail to make it properly.

So, follow these steps to draw them correctly:

  1. Locate the current market price
  2. Look at the chart’s left-hand side.
  3. Research for large green or large red candles.
    Identify the origin of the big candle.
  4. Locate the zone around this origin by clicking on the Bruch slogan in the left sidebar then choose the rectangle tool then draw.
How to draw S&D in Tradingview

Download Supply and demand indicator for MT4

Supply and Demand zones indicator for MT4 has been established using an MQL4  programming language. The supply and demand zones indicator is a smart drawing tool. It enables chartists to visually recognize supply zones and demand zones on the  MetaTrader 4  chart.

S&D indicator mt4

Download Supply and demand indicator for MT5

Supply and Demand indicator for MT5 has been developed using an MQL5 programming language. The MT5 supply and demand zones indicator is a bright representation tool of supply zones and demand zones on all types of charts.

Supply and Demand indicator mt5

Download Supply and demand indicator for Tradingview

Supply and demand zones indicator for Tradingview has been built adopting Pine Script coding language. This technical tool possesses the capacity to outline zones for the Tradingview charts based on supply and demand factors.

Supply and Demand indicator for Tradingview

Conclusion

Nowadays, supply and demand trading has become very popular among forex traders on MetaTrader 5 platforms. Because successful traders have to understand market price determinants. As a result, MT4 Supply and Demand indicator is highly used by traders that have little experience with those zones. To explain, it assists them to identify directions and understand what is occurring in financial markets through the Tradingview platform.

Key takeaways

Supply and demand zones indicator for Tradingview and MetaTrader platforms  enables you to:

  • Identify and observe supply zones automatically similar to support and resistance zones Indicator.
  • Recognize and watch demand zones automatically.
  • Classify supply and resistance zones strength.
  • Forecast price movement.
  • Predict Trend Reversal signals
  • Predict breakouts as soon as possible.