Supply & Demand Zone

A supply zone or demand zone is a price area where the market previously consolidated or based before an impulsive move away from it — supply above (an area where sellers were in control right before a drop), demand below (an area where buyers were in control right before a rally). It's one of the oldest concepts in technical analysis, predating the more recent order-flow vocabulary, and it's really just a formal name for classic support and resistance viewed through the lens of "where did the imbalance actually start."

Traders watch these zones for the same reason they watch any other reference level: price often revisits an area it left quickly, and how it behaves on that revisit — holding, or trading straight through — tells you something about whether the original imbalance is still in control.

Supply/demand zone vs. order block

This is the most common point of confusion in the space, because plenty of traders use the two terms interchangeably. The distinction, when people are being precise: an order block is one specific candle — the last opposing candle before the move. A supply or demand zone is broader — the whole consolidation or basing area the move launched from, which might span several candles. Every order block sits inside a supply or demand zone; not every zone narrows down to one clean candle.