Technical Glossary / Support, Resistance & Price Levels
Demand Zone
The area where a sharp rally began, treated as unfilled buy orders.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A demand zone is the base or the last down candle before a strong rally. The theory is that buyers who did not finish, or who defended that origin, may buy again on a return. It is the bullish mirror of a supply zone, and it is a theory about unfinished business rather than a guarantee.
How to identify it
A tight base or a down candle, then an impulsive rally that leaves and does not immediately overlap the base. Mark the origin, not the whole rally. Fresh zones have not been retested yet.
Bullish reading
The first return to a fresh demand zone is the textbook long, risk under the zone. A wick into the zone and a close back above it is the reaction you wanted to see.
Bearish reading
A close through the zone invalidates it. Price that grinds through a demand zone in a downtrend is not "holding." It is breaking. Do not keep buying a zone the trend has already walked through.
Common mistakes
Drawing demand under every bounce, including slow ones. The departure has to be strong enough to suggest imbalance.
Limitations
Zones are not inventory you can audit. Multiple tests, news, and a higher-timeframe trend through the level all reduce the value of the original story.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.