Definition
In the world of Forex trading across Africa, supply and demand zones represent specific areas on a price chart where powerful buying or selling forces have previously driven sharp price movements.
A supply zone forms where sellers dominate, pushing prices down. A demand zone appears where buyers take control, driving prices up. These zones mark historical turning points that traders from Nigeria to South Africa monitor closely for potential future reversals. These areas function similarly to support and resistance levels, helping traders identify where buying and selling pressure historically changes market direction. Unlike traditional indicator-based approaches, identifying these zones relies on reading raw price movements directly from the charts themselves.
Example in Action
Across trading floors in Lagos, Nairobi, and Johannesburg, supply and demand zones come alive when real traders place real money on the line.
A Kenyan trader spots price pulling back to a demand zone on USD/ZAR, waits for a bullish engulfing candle, then buys. Stop loss sits below the zone. Target? The next supply zone where sellers previously stepped in. When price breaks through key levels, traders must decide whether to enter immediately or wait for a pullback to confirm the zone still holds.
Why It Matters
Understanding supply and demand zones isn't just academic theory—it's what separates traders who survive from those who don't in African markets.
These zones help traders from Nigeria to Kenya make smarter decisions about when to enter and exit trades. They reduce risk by showing where price reversals typically happen. About 70% of successful forex traders across the continent use these zones to guide their trading strategies.
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