<p>A <strong>Demand Zone</strong> is a price area on a chart where buying pressure is anticipated to appear, often causing the market to pause or reverse upward. It is identified by past price action that shows a strong upward move after a period of consolidation or decline, indicating that many traders view the level as attractive for buying.</p>

<h2>How It Works</h2>
<p>Traders locate a demand zone by looking for a sharp rally that originates from a narrow price range or a series of small candles. The base of that rally—where the price stalled before the advance—is marked as the zone.</p>
<p>Within the zone, multiple buy orders are thought to sit waiting, either from retail participants or institutional algorithms. When price returns to this area, those orders can absorb selling pressure and push the price higher.</p>
<p>To trade a demand zone, a trader may:</p>
<ul>
<li>Wait for price to re‑enter the zone.</li>
<li>Look for bullish candlestick patterns (e.g., hammer, engulfing) as confirmation.</li>
<li>Place a stop‑loss just below the lower boundary of the zone.</li>
<li>Set a profit target at the next resistance level or a predefined risk‑reward ratio.</li>
</ul>
<p>The zone’s strength depends on how quickly the initial rally occurred and how much volume accompanied it.</p>

<h2>Why It Matters</h2>
<p>Demand zones help traders identify high‑probability entry points for long positions, aligning trades with underlying buying interest.</p>
<p>For example, if a stock falls from $50 to $45, then quickly jumps to $55 on strong volume, the $45‑$48 area where the jump began may be marked as a demand zone. Later, when the price retraces to $46, traders anticipate buying interest and may enter long, expecting the price to resume its upward trend.</p>
<p>Using demand zones alongside other tools—such as trendlines, moving averages, or volume analysis—can improve timing and risk management in both short‑term and swing trading strategies.</p>