In this article, I will show you the best & strongest supply and demand zones.
These zones are called confluence zones.
I will teach you how to identify these areas properly and explain how to apply it in Forex and Gold trading.
Know This
Let's start with a short but important theory.
In technical analysis, there are 2 types of supports and resistances.
Horizontal structures are supports and resistance that are based on horizontal key levels.
Vertical structures are supports and resistance that are based on trend lines.
A confluence supply or demand zone, will be the area of the intersection between a horizontal and vertical structures.
Best Demand Zone
Look at GBPJPY pair. I underlined a significant horizontal support and a rising trend line - a vertical support.
We see a clear crossing of both structures.
The trend line and a horizontal support will compose a narrow, contracting area. It will be a confluence demand zone.
Within, with a high probability, a high volume of buying orders will concentrate, and a strong bullish movement will initiate after its test.
Above is one more example of a powerful demand zone.
It was spotted on a Gold chart.
Best Supply Zone
There are 2 strong structures on GBPNZD: a vertical resistance - a falling trend line and a horizontal resistance.
These 2 resistances will constitute a confluence supply zone.
That is a powerful resistance cluster that will concentrate the selling orders. Chances will be high to see a strong bearish movement from that.
There is a strong supply zone on CHFJPY that is based on the intersection of a wide horizontal resistance and a falling trend line.
Supply and demand zones that we discussed are very significant. Very often, strong bullish and bearish waves will initiate from these clusters.
Your ability to recognize these zones will help you to make accurate predictions and identify a safe point to open a trading position from.
