3. Supply and Demand Zones

<insert p9 -p 16>
includes Dz, Sz, cp, rp, good base and how to identify supply and demand zones.

Basing candles

page 16:
How to draw SD Zones.
1. Start from the current price
2. "snake" your way from the current price upwards until you hit an ERC or a base.
3. basing candles has to be 6 candles or less.
4. qualify the basing candle - candles with less than 50% of body are qualified.
5. Draw the L1.
     - 15% < body, L1 is on the body of the candle
     - body < 15%, L1 is on the edge of the candle
6. Draw L2. L2 will always be the furthest price.
7. If there is a single base, the whole candle OHLC is the base.
8. note of step base. candles that closes higher than previous are also single candle bases of their own.


Rule:
To validate a Supply Demand Zone, either one of the following conditions must be med:
1. remove an opposing zone. (to validate a demand zone, it needs to remove a supply zone)
2. remove a swing high or low
3. remove trend line.


Exercise:
open up EURUSD chart and identify supply and demand zones.