In financial trading, a supply zone refers to a price level or area where selling pressure has historically been strong and has caused prices to decline. Traders use supply zones to identify areas where selling may occur in the future, and to make trading decisions based on this information.
Similarly, a demand zone refers to a price level or area where buying pressure has historically been strong and has caused prices to rise. Traders use demand zones to identify areas where buying may occur in the future, and to make trading decisions based on this information.
Trading zones, on the other hand, refer to areas where there is significant trading activity occurring. These zones can be either supply or demand zones, or they can be areas where both buying and selling are occurring. Traders may use trading zones to identify areas of potential support or resistance, where prices may be more likely to move in one direction or the other based on the balance of buying and selling activity.
In summary, supply and demand zones are used to identify areas where buying or selling pressure may occur in the future, while trading zones are used to identify areas of significant trading activity.