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I am not the type of a trader that uses profusely indicators.
Even quite the contrary! My students know exactly what I use and most of the time, it is the chart itself. Juggling between a few timeframes and using price action has proven to be the best tactic when it comes to using supply and demand zones.
On the other side, there are traders that are using indicators in combination with supply and
demand zones. Traders are looking for a confluence between indicators and supply and demand zones. I cannot blame them for that, but indicators have proven almost useless for me to use in conjunction with supply and demand zones.
One of the only exceptions is probably the RSI indicator.
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A possible way to trade supply and demand zones by using indicators is by finding divergences between an indicator and the price. If that coincides with a supply or demand zone, it gives you even a better indication of which way the price will go. I personally prefer not to mix supply and demand zones and indicators. The cleaner the chart, the easier to read the signal!
Price Action and Why It Is the Best Way To Trade Supply And Demand Zones
Price action is the way I trade the markets. As you might already know, I do combine it with a few other tools, but certainly try to keep it clean. Price action trading fits perfectly well supply and demand trading. There is no better confirmation for a supply or demand zone that a price action pattern.
A) Supply Zone Example with Price Action
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Let’s have a look at the following example:
That is a great example of combination of price action trading and supply and demand zone.
There is an inside bar that formed inside the supply area.
As you can see, it influenced the price and led to a large sell-off in DAX.
B) Demand Zone Example with Price Action
As with supply zones, trading price action with demand zones is a great way to enter into a highprobability trade.
Here is an example of a demand zone trade with price action.
As you can see from the figure above, this demand zone around 125.00 is a great example of a support. Together with the pin bar, it forms a great reversal point.
From my experience in trading, there is nothing more powerful than a combination between price action trading and supply and demand (or areas of support and resistance) zones.
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