Price Action Study: Single Candle Supply & Demand Zones

BINANCE:ETHUSDT   Ethereum / TetherUS
Happy Sunday everybody, today I'll be providing a quick writeup on identification of single-candle Supply & Demand zones, otherwise known as "Orderblocks" (Credits to ICT for coining this phrase)

Supply & Demand are one of the most fundamental aspects of trading securities.

In price action - liquidity is believed to be the driving force behind market movements. The primary reason assets move is because of an imbalance between buyers and sellers - supply & demand .

  • If supply outweighs demand, price moves down.
  • If demand outweighs supply, price moves up.
  • If supply and demand are relatively the same - the market consolidates.

Supply and demand zones are created during consolidations - and today we are going to look at how to identify them. When prices is to return to these zones, we look for signs of accumulation to go long, or distribution to short.

Single candle supply and demand zones are also commonly referred to as "orderblocks" - here's how to identify them.

Demand/ Bullish OB: A down candle before an up move that breaks market structure - a higher high.
Supply/ Bearish OB: An up candle before a down move that breaks market structure - a lower low.

It is an important distinction - we need a structural break for the zone to be a meaningful region to watch if/when price is to return.

-Will, OptionsSwing Analyst
Education first, profits second.